Kavango Resources plc (LSE: KAV), the Southern Africa focussed metals explorer, is pleased to announce that it has received a maiden Resource Estimate (the “Resource Estimate”) for the largest tailings dump at the Nara Gold Project (“Nara”) in Zimbabwe.
The Resource Estimate highlights the potential for the tailings dump to provide Kavango with a significant near-term source of gold production and early, non-dilutive free cash flow.
HIGHLIGHTS
– The Resource Estimate concludes that the two Nara tailings dumps tested together contain:
– An Indicated Mineral Resource of 293,000 tonnes (“t”) at an average of 0.62 grams per tonne (“g/t”) gold, for a total of 5,860 ounces gold contained.
– An inferred resource of 11,900t at 0.66g/t gold, for a total of 253 ounces gold contained.
– Some 96% of the Mineral Resource has been categorised as Indicated thus placing it into a relatively high resource category for the early stage of the project, demonstrating confidence in the continuity of the material.
– Future extraction costs will be operational, with no mining required.
– The Mineral Resource Estimate also identified upside potential at the tailings dump, highlighting the opportunity to increase tonnage at as-yet-untested depths.
– Kavango is now assessing options to commercialise the gold in the Nara tailings dump.
– The Company plans to use free cash flow generated by any tailings production to advance its wider exploration activities targeting large-scale, bulk-mineable metal deposit discoveries in Zimbabwe.
Kavango currently has an exclusive 2-year option to buy Nara (announced >>> 26 June 2023).
Ben Turney, Chief Executive of Kavango Resources, commented:
“This Maiden Resource Estimate for gold for the Nara tailings dumps is the first Mineral Resource Estimate Kavango has delivered.
It’s a milestone moment for our company and reflects the speed at which we are growing in Zimbabwe.
Given that this is a tailings dump, all material has already been mined and there are no further mining costs. The Resource Estimate and high resource category achieved underline the commercial potential at Nara.
While our primary objective is to discover larger-scale, bulk minable gold deposits, the 6,000 ounces of gold in the main tailings dump present an early opportunity for commercialising this project.
The free cash flow we could generate from processing the gold in the Nara tailings can help fund both our development of this project and our wider exploration across Zimbabwe’s highly prospective, under-explored greenstone belts.
We will now commence metallurgical test work to optimise plant design to enable future gold production.”
Background
Kavango signed an exclusive two-year option to acquire the Nara Gold Project in June 2023 (announced >>> 26 June 2023).
Nara covers four historic mines with total recorded production of more than 90,000oz in the first half of the 20th Century. These mines also produced credits of tungsten and silver. There is a 30-year plus history of small-scale mining & custom milling on the property.
No drilling or modern exploration has been carried out to assess the >4km of strike potential at Nara, meaning that longer term there is significant potential for Kavango to explore for hard-rock resources, and for which it is ultimately targeting >1 million oz. gold potential.
Near-term cash flow potential also exists at Nara within the project’s historical tailings dumps. These are the focus of the current resource estimate.
In Q4 2023, Kavango engaged a contractor to carry out auger sampling on two of the tailings dumps at Nara. Each hole was drilled using an engine-driven hydraulic auger with a 50 millimetre (“mm”) rotating spiral enclosed within a core barrel. Samples were extracted at 1.5 meter (“m”) intervals at an average mass of 1.51 kilograms (“kg”), placed in plastic bags, ticketed, and sealed.
Analysis of these samples was subsequently carried out by a laboratory in Zimbabwe. The samples were pulverised, split, weighed into 500 gram (“g”) aliquots and bottle rolled for 24 hours in 0.2 % CN at a pH of 10.5 to 11. The solutions were analysed for gold via atomic adsorption spectrometry (AAS).
Of the samples, 10% were selected for fire assay. This was utilised to provide an indication of ‘recovered’ grade of gold in the bottle roll versus total gold content.
Resource estimation was carried out in February 2024 by Dr John Arthur, a UK based independent resource consultant. Mineral Resource classification categories and subsequent reporting are summarised in the following table. The Mineral Resource Statement presented has been classified in accordance with the requirements of the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC 2012 Edition). The Competent Person who assumes responsibility for reporting of the Mineral Resource is Dr John Arthur who is a Competent Person as defined by the JORC Code 2012 Edition, having more than 5 years experience that is relevant to the style of mineralisation and type of deposit described herein, and to the activity for which he accepts responsibility. The effective date of the Mineral Resource statement is 5 March 2024.
Updated surface topography and original basal topography along with surveyed drill collars were used to model the volumetric domains for the larger East and smaller West dumps. Auger drilling results were validated and composited prior to Exploratory data analysis (EDA) which established the nature of the variography and indicated anisotropic ranges of between 40-60m for the gold grade distribution within the individual dump domains. Analysis was carried out separately for the two dumps. Following validation of the variography and appropriate kriging neighbourhood analysis (KNA) a parent block model using 10x10x4m blocks was established which, given the drill spacing of 20x20m and 1.5m sample interval (on average) was considered appropriate and was confirmed by the KNA analysis. The parent model was subsequently sub-blocked to allow a better fit to the domain boundaries and Ordinary kriging was carried out on gold grade values within the parent blocks. Density data is limited and a value of 1.76t/m3 was applied globally based on the results obtained from 6 sites across the dumps and the average expected value of sand material benchmarked from various sources.
The classification of the majority of the material into the Indicated category is considered to be conservative and is primarily due to the lack of detailed density information. Dr Arthur considers that a significant tonnage of material could be subsequently upgraded to the Measured Mineral Resource category given a relatively small amount of work to establish detailed density analysis across the two dumps.
Mineral Resource Statement
Table 1. Nara Tailings Mineral Resource statement, effective date 5 March 2024
|
Domain |
Category |
Tonnes (Kt) |
SG |
Au (g/t) |
Au (oz) |
|
NARA East & West |
Measured |
– |
– |
– |
– |
|
Indicated |
292.94 |
1.76 |
0.62 |
5860 |
|
|
Meas + Ind |
292.94 |
1.76 |
0.62 |
5860 |
|
|
Inferred |
11.9 |
1.76 |
0.66 |
253 |
NOTES:
1. Mineral Resources estimated using 0.0 (zero)Au.g/t cut-off grade and presented on a 100% (of bottle roll value)-basis
2. Mineral Resources include mineralisation which may subsequently be evaluated and classified as Ore Reserves following appropriate technical and economic study.
3. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, marketing, or other relevant issues. Notwithstanding, it is considered that the reported Mineral Resources show reasonable prospects for eventual economic extraction.
4. The quantity and grade of reported Inferred resources in this estimation are uncertain in nature and there has been insufficient exploration to define these Inferred Resources as an Indicated or Measured Mineral Resource. It is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category.
5. Contained metal and tonnes figures in totals may differ due to rounding.
Next Steps
Kavango intends to carry out metallurgical test work to assess further the potential recovery of gold, reagent consumption, and operating parameters for a possible future facility to process Nara’s gold tailings.
Kavango will also carry out additional density measurements, which the consultant recommends may allow for a portion of the resource to be upgraded to a Measured Mineral Resource category.
The Company will follow this up with a study aimed at commercialising Nara’s gold tailings opportunity to achieve early cashflow.
Kavango intends to investigate potential upside in the Mineral Resource Estimate identified by Dr. Arthur’s work.
Multiple holes stopped short due to intersecting items such as past concrete infrastructure, meaning there is potential for the tonnage to increase.
Likewise, some grade enrichment with depth was also seen in multiple holes, potentially as a result of gravity concentration. Given that not all holes reached target depth this may offer additional contained gold beyond the original target depths scoped out for the auger drilling.
The Nara Option
Under the terms of the Option, Kavango has full access to Nara to conduct field due diligence.
To exercise the Option, Kavango would pay the current claims holder (the “Vendor”) US$4million cash (the “Acquisition Price”).
Kavango has agreed to pay an option fee to the Vendor of up to US$220,000 over the 2-year option period, split into 4 individual payments of US$55,000 each payable at the start of each half year of the option period (the “Option Payments”).
In the event Kavango exercises the Option, any Option Payments paid to the Vendor will be deducted from the Acquisition Price.
Further information in respect of the Company and its business interests is provided on the Company’s website at www.kavangoresources.com and on Twitter at #KAV.
For further information please contact:
Kavango Resources plc
Ben Turney
+46 7697 406 06
