The Australian
BARRY FITZGERALD
At MOD, all that glitters is not gold but copper
In the current hot market for gold stocks, ownership of a one million ounce gold resource in New Zealand would be more than enough to encourage interest in an ASX-listed junior exploration company.
But if the same company has what the mining smarties in the market think is a hotter than hot copper project on its books, the NZ gold asset very quickly becomes marginalised. And so it is with Julian Hanna’s MOD Resources (MOD).
For many years it was the company’s 80 per cent-owned 1.02 million ounce Sams Creek gold project in New Zealand’s South Island that drove interest in the stock. Now it is up for sale because in the last year or so, MOD has fast become one of the best emerging copper stock stories on the strength of its Kalahari project in sunny Botswana.
First up it can be said that if you have to have a project in Africa, Botswana would be one of the preferred locations. It’s friendly, safe and flat. And just as important, the sort of cost escalation that wracked the global industry during the mining boom never really arrived in the country.
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Interest in MOD’s Botswana copper adventure picked up late last year when along with the AIM-listed Metal Tiger plc, it picked up a chunk of prospective ground in the central and western part of the Kalahari copper belt on a 70:30 per cent basis.
The land package was picked up for a song from the administrator of Discovery Mines, which went bust for reasons that are no reflection on the big-time copper appeal of the Kalahari belt (its mining assets to the northeast now sit in a Barclays-backed private equity resources fund, Cupric Canyon Capital).
Cutting to the chase, MOD’s foothold on a 20km wide by 50km long structural zone that has yielded three discoveries to date — the T1 deposit (which predates the pick-up from Discovery) and the T2 West and T3 finds.
It was the 52m intersection grading 2 per cent copper earlier this year at T3, which saw interest in MOD step up in a big way. What was a 1c stock back in March is now a 5.4c stock, valuing the company at $80 million.
MOD has six drill rigs whirring away at the location and it is waiting on some final assays before getting out a maiden resource estimate by the end of next month.
One of the analysts following the stock has had a stab at an initial resource estimate of more than 200,000 tonnes of copper.
That would be a good start at T3 and alone explains the interest in the stock.
However, last week MOD put out some preliminary drill results on T2 West, the second of the multiple targets to be tested by MOD/Metal Tiger joint venture.
The results included widespread and visible copper mineralisation over 20m widths with assays eagerly awaited.
Hopefully the assays should hit the market in a couple of weeks. And the story won’t end there with the joint venture as keen as mustard to get some drill holes in to the T9, T5, T7 and T4 prospects.
So news flow from MOD will be extreme in the coming weeks and months. The unfolding story is independent of the current weakness in copper prices. But most suspect that at $US2.08 a pound, the red metal is bouncing along the bottom.
The idea is that falling grades at the world’s big existing producers, and robust long-term demand as the developing goes about its electrification in its many forms, will see copper strengthen towards the end of the decade. That would suit MOD just fine.
