African Copper, the copper miner with a focus on Botswana reported yet more encouraging drilling results from its flagship Dukwe prospect, this time indicating the mine can be significantly expanded.
Latest drilling results from Dukwe confirm that high-grade mineralisation extends at least 350 metres to the south of the current Dukwe resource in northern Botswana.
That means known mineralisation at the site now extends over 2.4 km, providing further support for the group’s ambitions to expand the already impressively loaded deposit.
On a further promising note, the group reveals that a geophysical survey to the north of the proposed pit area has also identified anomalies that are larger, deeper and more extensive than the south. A planned drill programme promises to reveal a further extension to known mineralisation.
’The deposit remains open to the north, south and to depth,’ adds the group.
More confirmatory data is needed but the upshot of today’s data is that there is now a real possibility the mine is capable of being significantly expanded going forward.
The group’s existing production schedule is targeting first production at Dukwe in the first quarter of 2008, with a ramp up to full production – around 20,000 tonnes per annum – over the remainder of the year. Site construction is scheduled for completion late in the fourth quarter of the current calendar year.
With African Copper confident of being able to produce a new, improved resource estimate for Dukwe by the end of June, Numis analyst Marc Elliott is already anticipating that current production estimates of 20,000 tonnes per annum will be upgraded in due course.
’With the deposit open to the north, south and at depth, we believe there is considerable upside potential at Dukwe yet to be realised,’ he adds.
The group’s other main asset in Botswana is the Matsitama prospect, a 4,000 sq km exploration area containing numerous showings of copper, lead-zinc and nickel. This is a longer-term project but early drilling results have been very encouraging.
African Copper listed on AIM in November 2004, raising £15m via a placing at 76p. It is also listed on the Botswana stock exchange.
The shares fell below the listing price over 2005, dropping to a low of 39p in May of that year as project delays dented sentiment.
A flurry of good results, first from Dukwe and then from Matsitama towards the end of 2005 and over 2006 helped the shares recover. In May 2006, the group raised £58m via a placing at 77.5p.
With no production, the shares have been exposed to volatility in copper prices. Yet the long-term outlook for copper, which is intimately linked to economic growth, not least in China and India, in our view, remains very positive.
With African remaining on track to begin output from Dukwe in early 2008, expansion of Dukwe looking to be on the cards, and Matsitama continuing to return good early results, the group’s medium to long term prospects remain bright.
African Copper PLC shares edged up 2.5p or 3.2% to 80.5p this morning, valuing the group at £105.6m.