SMALL CAP IDEAS: Kavango raises £3.5m for exploration in Botswana

How will the junior mining exploration sector look over the next 12 months?

One possibility is that newsflow in the sector might just about dry up, as markets become even tougher and money to pay for work on the ground becomes harder and harder to find.

If that’s true, though, Kavango Resources is likely to be a beacon of light in an otherwise gloomy sector.

Because Kavango has just raised £3.5million at 1.8p a share in new money to fund its ongoing exploration activities in Botswana.

It’s a big amount in a sector where a typical fundraising might be £1million, and there are plenty of companies that would settle for less than that.

Over the past couple of years, the company has undertaken significant work at its flagship Kalahari Suture Zone project, deploying new technology to work up new geological models 

But Kavango isn’t just scratching around at ‘moose-pasture,’ as the industry slang would have it.

Rather, it’s sitting on what could be some of the biggest discoveries to come out of southern Africa in years.

Big potential, big raise – it’s as simple as that.

Or to put it another way, this is no ordinary exploration company.

Any one of the targets that Kavango has in its portfolio could serve as a company maker, and any one of them might on their own absorb the entire energies of a comparable peer.

But Kavango benefits from a handy combination – its founders are seasoned experts in their fields, long in the tooth and rich in experience, and wise enough too to know that running a company full time is a job for a younger team.

So, Ben Turney was brought in a year or two ago, to bring the kind of energy and verve it takes to turn exploration dreams into mining reality.

Can he do it? He hasn’t done it yet, but he’s certainly moved the story along pretty rapidly in a short period.

Over the past couple of years, the company has undertaken significant work at its flagship Kalahari Suture Zone project, deploying new technology to work up new geological models, none of which have yet to disprove the original thesis – that the KSZ may play host to a major Norilsk-style deposit.

For those not in the know, Norilsk is one of the biggest nickel and platinum group metals projects in the world, and while there are differences between it and KSZ, most notably in terms of depth, the geological similarities are striking.

That depth is an issue, though. If there is Norilsk-style mineralisation, it’s likely be situated at between around 500 metres and 700 metres beneath the surface, down through significant cover of Kalahari sands, and on into bedrock.

Drilling something like that isn’t out of the question for a junior miner, but it is out of the ordinary.

Not many companies would take it on, and even fewer would take on the challenge of keeping on going down deeper, to around 1,000 metres, where there may be yet another mineralised zone, this time with iron, copper and gold.

That kind of can-do attitude certainly marks Kavango out from the pack – at the KSZ the risks are bigger, but so are the rewards.

What might they be? That’s impossible to say with any accuracy at this stage, but it’s worth noting that the company built around Norilsk is one of the biggest in the world, and that the iron-oxide copper-gold mineralisation bears some similarity to the Olympic Dam, one of BHP’s biggest and most valuable assets.

Kavango, then, is exploration done in style. Not for Turney and his team a few small-scale drillholes looking for a few grams of gold here or there in some near-surface vein or other.

At KSZ, it’s all or nothing stuff, with the crucial caveat that with £3.5million in the bank, the company can really give it its best shot.

‘We’re going to put a lot of metres into the ground,’ says Turney, matter-of-factly. That’s all there is to it.

And there’s no question the drilling will go ahead, never mind that sentiment in the exploration sector is poor.

In fact, the drills are already turning on one of the company’s other projects, the Kalahari Copper Belt, where the broad aim is another discovery along the lines of the one Metal Tiger delivered not far away at T3 and eventually sold on at considerable profit.

Around 37,000 metres of drilling will go into the ground here, all told, and the results from that are likely to light up the sector’s newsflow for months to come.

Turney reckons that if discoveries are to be made, actually it’s more likely that one will occur on the KCB first.

That in itself would be a company maker. But a discovery on the KSZ could do even more – it could change the whole face of the mining industry in Botswana and southern Africa.

This post first appeared on Dailymail.co.uk