At Kavango, we believe the scope and scale of our exploration portfolio is a testament not only to our ambition, but also to our focus.
Indeed, we have a very large position over the Kalahari Suture Zone in the southwest of Botswana, where we’re exploring for copper, nickel, and platinum group metals.
But alongside this, our exposure to the African nation also extends to the exciting Ditau Camp project, where we’re looking for rare earths and base metals, and a number of licences in the Kalahari Copper Belt, where the target is–naturally–copper.
So, what can we glean from the nature of this expansive land package?
Two things, we believe.
First, our geographical focus is clearly on Botswana.
And secondly, our focus is geared heavily towards exploration.
You see, Kavango is a company that knows how to play to its strengths, and the strengths in question here are the combined exploration expertise of our founders and the crack team of geologists we are employing to advance several of our projects simultaneously.
Since our inception, our vision has always been for discovery rather than production.
And the reasons are simple.
Exploration is in the blood of our operatives, as we’ve established.
So, there’s that. But there’s also a far more economically-minded and pragmatic reason too.
In percentage terms, the real upside in mining lies in the discovery phase.
The famous Lassonde Curve, which models the life cycles and valuations of projects from early-stage exploration right through to production shows two big value uplifts – the first on discovery, the second at the point of production.
And ultimately, a great amount of value can be made at the first of these stages.
Of course, the discoveries have to be meaningful. But Kavango has never been about small fry.
The Lifecycle of a Mineral Discovery
Credit: Visual Capitalist
We are not a company that focuses entirely on finding a few hundred thousand ounces of gold here and there.
Not at all.
Our goal is serious and focussed exploration.
For example, if the hypotheses that underly our exploration effort at the KSZ can be proven, then Kavango may end up discovering one of the biggest nickel and/or PGM projects in decades.
Likewise, with the copper potential in the north and with the rare earths at Ditau– we are targeting big discoveries, and giving ourselves a chance to capture the value uplift on offer on that first upward stage of the Lassonde Curve.
Nothing is off the table, of course. But the idea of an exploration junior starting to focus on that second part of the Lassonde Curve by developing tier-one producing projects that stand up on the global stage is an extremely ambitious one.
At the present moment, in any case, Kavango is focussed on the more immediate term.
If we can add plenty of value at the early stage, then we can then decide whether to let bigger players shoulder the development and execution risk. And while that’s going on, we can continue to focus on the other assets in our exploration portfolio.
Will we exit our major projects completely, once a development scenario becomes realistic? That’s an open question, and one that can only be answered when the time comes.
However, there’s no doubt that when development does happen, it’s very unlikely to be Kavango that takes the lead.
Why would we? There are plenty of other companies that excel at that sort of work.
But in our case, all the experience we have built up identifying and investigating targets in Botswana make us one of the best-placed exploration companies in the country to make further discoveries.
It’s a no brainer to keep going with the exploration.
And in this context, our ongoing activities assume something of the aspect of a virtuous circle, as more and more knowledge is accumulated inside the company, and increasing amounts of data are generated.
Exploration isn’t easy, of course, and not every hole will be a winner.
But you only have to look at the companies that have dreamed big and then subsequently delivered to understand how much of a value uplift is on the table.
Two companies that have succeeded in this in recent years are Greatland Gold and SolGold. Although both still have exposure to the flagship assets that they discovered, they are no longer the operator or even the major shareholder.
Rather, they are letting other companies do the heavy lifting for them and this allows them plenty of room for manoeuvre to continue with exploration on other projects.
Another example from earlier times is Kiwara, a pure-play copper explorer in Zambia which hit a couple of very good intercepts and was then bought outright by First Quantum in a deal which delivered shareholders millions of dollars and a spectacular percentage return.
Which way will Kavango go?
Well, one thing at a time. First things first, the big drill hits are required.
But if they come in, then our options really start to open up, and our exploration portfolio will really start to hum.