There are many commodities out there offering investors exposure to the global electrification trend. However, very few of them boast market dynamics as attractive as those in the rare earth elements (“REEs”) space.
REEs are essential to high tech manufacturing, used in everything from EV batteries and wind turbines to screens and even the nuclear industry. But right now, their production is dominated by China, a country many Western nations are looking to diversify away from when it comes to commodity supply chains.
Naturally, roaring demand in the face of constrained availability has created a strong price outlook for REEs. In response, new potential sources of production are eagerly being sought out by miners and investors alike.
Now the drill bit has begun to turn, one new opportunity primed to enter their radar is the Ditau project in Botswana owned by Kavango Resources and Power Metal Resources.
Carbonatite potential
The important thing to know about Ditau is that it is prospective for circular rock structures called carbonatites that are responsible for most of the world’s REEs production. And critically, the biggest projects of all arise when carbonatites occur in “swarms” along clearly defined geological trends.
Work already suggests that Ditau’s 12 carbonatite targets occur along the edge of a known trend hosting diamond-containing kimberlites. But even more encouragingly, this trend is also thought to lie parallel to similar corridors elsewhere in Botswana and Angola that host both kimberlites and significant carbonatite intrusives.
In addition to this, another indicator of Ditau’s potential was unearthed back in the 1970s when an explorer discovered a small cluster of carbonatites to the immediate north and along strike of the project. For whatever reason, however, they were never followed up.
Over the last two years, Kavango has been developing these encouraging early signs of mineralisation through extensive modelling and exploration. This week, these efforts culminated with the launch of the project’s biggest-ever diamond drilling campaign.
Kavango’s goal–although it has said this is flexible–is to test Ditau’s three highest priority geophysical targets by drilling two holes at each to a depth of up to 400m. And as noted in an update on Tuesday, its first stop on this tour will be a target called i10.
Why? Well, for one thing, i10 is quite easy to access–relatively speaking. Indeed, Kavango’s analysis suggests its primary target zone sits underneath just 120m of sand cover.
But beyond this, Kavango’s work has also led it to believe that i10 conforms to an “idealised model for [a] carbonatite intrusive”. Specifically, it believes it could be a discrete, kilometre-scale carbonatite pipe.
Not just any carbonatite pipe, either–the company has used the REE-bearing Kangankunde carbonatite pipe as a model in its analysis of i10.
For context, Kangankunde is one of the largest carbonatites in the Chilwa region of Southern Malawi. Although i10 is buried rather than forming a low hill like Kangankunge, Kavango reports that the pair’s geophysical signatures bear a striking resemblance.
Geological map of the Kangankunde carbonatite pipe
Moving on up
Kavango’s primary objective is to retrieve rock core from two holes at i10’s magnetic high and use it to establish whether the geophysical anomaly is a carbonatite intrusive.
Once it has done this, it will do the same at two other high priority locations previously identified as i8, a slightly larger ring target, and i1, a target thought to possibly represent a large 7km x 18.5km magmatic intrusive.
The company plans to release a comprehensive report of the outcome of its six-hole programme “once all data has been processed and verified”.
The upshot of this, of course, is that we won’t know whether Ditau can live up to its encouraging potential until work completes. As CEO Ben Turney put it himself, it’s now down to the “truth detector” that is the drill bit to tell us what the project contains.
The bottom line, however, is the upside in the event of success stands to be highly significant.
After all, should one or more of Ditau’s high priority targets be found to contain REE-bearing carbonatites, then considerable value stands to be unlocked across the project in the eyes of potentially interested third parties.
Even better, if things do go well, then Kavango and Power Metal have locked and loaded a further 17 drill collar locations for future test-drilling across the remainder of their carbonatite targets.
We’ll have to wait and see. But the fact still remains; when ground floor projects like Ditau do end up as a success, investors with ground-floor exposure can end up as the biggest beneficiaries.
The opinions expressed here are those of the author
Disclaimer: This blog is provided for general information and It does not constitute investment advice, not buy or sell shares, warrants or bonds in any companies written about within the blog. Information is taken from publicly available sources and any comment is that of the author.
