Botswana Nickel Project - Progress Update

RNS Number : 3796R

Power Metal Resources PLC

29 October 2019

 

29 October 2019

Power Metal Resources plc ("POW" or the "Company")

Botswana Nickel Project - Progress Update

Power Metal Resources plc (LON:POW) the AIM listed African focused metals exploration and development company is pleased is pleased to provide an update in respect of the progress achieved by Kalahari Key Mineral Exploration Pty Ltd ("Kalahari Key" or "KKME") at the Molopo Farms Complex project in Botswana ("MFC" or the "MFC Project").

The targets are believed to be highly prospective for massive nickel sulphides.

Power Metal Resources has an 18.26% shareholding in Kalahari Key and also has a right by 31 December 2019 to elect to earn into a 40% direct project interest in the MFC project by investing US$500,000 in the Project by 31 December 2020 (the "Earn-in"). 

Highlights:

·   A helicopter-borne electro-magnetic ("EM") survey over the Molopo Farms Feeder Zone project area completed in Q2 2019 identified 17 sub-surface conductor targets and follow up ground EM surveys over 14 of the targets produced at least 6 high priority targets of considerable size and scale for which 8 drill holes have been designed to penetrate all targets;

·    The targets are highly conductive bodies which could potentially be host to massive nickel sulphides due to the spatial location, particular geological setting and associated magnetic response;

·    Further work has been undertaken to select the top priority targets and 5 have now been selected as a focus for the initial drilling programme;

·   Kalahari Key have appointed consultants Wellfields Consulting Services in Gaborone, Botswana to complete a pre-drilling Environmental Management Plan ("EMP") and fieldwork in respect of this EMP has now been completed and Kalahari Key await receipt of the EMP report;

·    Kalahari Key are to shortly implement gravity surveys over 5 drill targets, to eliminate as far as possible any chance that the targets are graphite rather than sulphide bodies, since the former although conductive would not be of interest, although this is considered unlikely given the geological setting;

·    Further liaison with drilling contractors is underway, including some who have expressed a willingness to consider equity in lieu of cash for a portion of their drilling costs in respect of the initial programme;

·   There is interest in the MFC project from third parties and Kalahari Key are maintaining liaison with external organisations;

·    Given the potential valuation uplift on a positive initial drill results the preference at this stage would be to undertake the initial drilling programme before formalising any agreement with a third party in respect of project or company disposal, farm-in or joint venture; however all options remain open to discussion, subject to appropriate commercial terms;

·    Further updates to shareholders will be provided at the earliest opportunity.

Paul Johnson, Chief Executive Officer of Power Metal Resources commented: "Kalahari Key are rapidly advancing in Botswana to a position where they can drill the high priority targets.  The initial programme will cover 5 very strong conductor targets and will optimise the chance of making a discovery.

Nickel stocks at the LME continue to fall dramatically, and we believe that the price of nickel will appreciate accordingly.  As such, partially positioning POW in the nickel exploration space is deliberate to expose our shareholders to the upside that comes within the nickel sector during times of positive supply/demand dynamics.

We continue to focus on delivery and progress across our projects and anticipate a number of updates across our company in the coming weeks."

Kalahari Key and MFC Project Background

Kalahari Key Mineral Exploration Company (Pty) Ltd, registered in Botswana, is a mineral exploration and geological consultancy company.

The MFC Project consists of three licenses covering an area of 2,725 square kilometres that are considered prospective for Nickel-Copper-PGMs mineralisation and are 100% owned by Kalahari Key.

In November 2016 the company acquired two mineral exploration licences (PL310/2016 and PL311/2016) from the Botswana Government. The licences cover the eastern and central parts of a shear/feeder zone through the centre of the Bushveld-related Molopo Farms Complex in southern Botswana. A third licence (PL202/2018) was acquired in early 2018 immediately to the south of PL311/2016.

Power Metal Resources Interest in Kalahari Key and The MFC Project

Power Metal Resources has an 18.26% shareholding in Kalahari Key and also has a right by 31 December 2019 to elect to earn into a 40% direct project interest in the MFC project by investing US$500,000 in the Project by 31 December 2020 (the "Earn-in"). 

Should the Company elect to Earn In, Power Metal Resources will hold an effective economic interest of 50.96% in the Project.

The Company's Kalahari Key acquisition agreement was announced on 13 May 2019 and readers can review this announcement through the following link:

https://www.powermetalresources.com/n/n104/acquisition-and-earn-in-agreement-botswana-project

Further Information on the POW Project Level 40% Earn-In to the MFC Project

Not later than 31 December 2019 POW may elect, at its sole discretion, to earn-in to 40% of the MFC Project by entering into and then fulfilling a commitment to spend US$500,000 ("Committed Spend") during the period to 31 December 2020.

Upon POW entering into the Earn-in (or earlier with the agreement of all parties) an MFC Project operational committee (the "Committee") will be established comprising members Roger Key (Kalahari Key Director), Andrew Bell (POW Director) and Andrew Moore (Kalahari Key Director).  The Committee will determine the allocation of the Committed Spend and management of operational activities.  Upon completion of the Earn-in expenditure requirement POW will hold 40% of the MFC Project

The Committed Spend will be applied primarily to the completion of drilling of four targets at the MFC Project.

Also, upon POW entering into the Earn-in (or earlier if agreed by all parties) Paul Johnson (POW Director) will join the Board of Kalahari Key.

Neither the Committee members nor the existing or new directors of Kalahari Key will be remunerated for their services.

Also, upon the Company entering into the Earn-in, a Joint Venture Agreement will be established between the parties which will determine strategy, operational management and corporate structuring.  This will include the usual fund or dilute provisions unless an alternate structure is agreed by the parties.

The information contained within this announcement is considered to be inside information prior to its release, as defined in Article 7 of the Market Abuse Regulation No.596/2014 and is disclosed in accordance with the Company's obligations under Article 17 of those Regulations.

For further information please visit https://www.powermetalresources.com/ or contact:

Power Metal Resources plc
Paul Johnson (Chief Executive Officer)	[phone]
SP Angel Corporate Finance (Nomad and Joint Broker)
Ewan Leggat	[phone]

SI Capital Limited (Joint Broker)

Nick Emerson                                                                                                         [phone]

Notes to Editors:

Power Metal Resources plc (LON:POW) is an AIM listed African focused metals exploration and development company exploring for the key metals used in power generation, transmission, storage and utilisation. The Board and team of advisors, who have proven expertise in exploration, mining and project generation, have identified an opportunity to utilise the Company's position to become a leader in the London market for investors to gain exposure to the power metal commodity suite, particularly nickel, copper and cobalt. 

 

END

 

 

UPDFEEFMAFUSEDS