Cohiba launches aggressive IOCG exploration blitz in same neighbourhood as BHP

Cohiba is ramping up its exploration blitz next door to mining heavyweight BHP in South Australia’s Gawler Craton – the world’s premier spot for the discovery of iron oxide-copper-gold deposits (IOCG).

Cohiba Minerals (ASX:CHK) is preparing to begin a multi-million-dollar exploration campaign, including drilling up to 19,000m, after drilling at its Horse Well prospect in March showed it is in the right spot and potentially sitting on the next big IOCG deposit.

And there’s no better time to be looking for copper than when the market commentators are predicting the price of the red metal will reach $15,000 a tonne by 2025.

The news edged shares up nearly 6 per cent to an intra-day peak of 1.8c on Wednesday morning.

Cohiba Minerals (ASX:CHK) share price chart

“The company’s recent exploration activities at its Olympic Doman tenements, particularly at Horse Well, confirm the exciting potential for IOCG discoveries there,” CEO Andrew Graham said.

“The company is planning an extensive program of exploration activity, including up to 19,000m of drilling, to further test for this potential.

“Financially, we are in a very strong position to pursue this objective over 2021 as well as take advantage of opportunities to grow our portfolio in the Gawler Craton.”

Cohiba, which had $7m in the bank at the end of December, has committed $3.5m to exploration at the Horse Well, Pernatty C and Lake Torrens prospects.

The company has uncovered multiple targets in close proximity to world class deposits like BHP’s (ASX:BHP) giant Olympic Dam and OZ Minerals’ (ASX:OZL) $1bn Carrapateena copper-gold mine, which began production in December 2019.

Horse Well is the key focus, with around 12,000m of additional drilling expected to be undertaken at the prospect given its close proximity to BHP’s Oak Dam West discovery where drilling has confirmed the presence of significant IOCG mineralisation.

Two holes drilled earlier this year at Horse Well encountered rock types typical of an IOCG environment, with one returning some spectacular copper grades including up to 12.15 per cent copper, 2.62 grams per tonne (g/t) gold and 42.5g/t silver from 1,033m.

Previous comprehensive geophysical analysis by Cohiba indicated the presence of a major “feeder” system believed to be associated with IOCG mineralisation that is comparable in size to the Olympic Dam feeder system.

IOCG systems can be tremendously large, high grade, and simple-to-process concentrations of copper, gold and other economic minerals.

No shortage of IOCG opportunities

The Pernatty C area is considered to be prospective for stratabound, copper-cobalt-silver mineralisation consistent with the nearby Mt Gunson mining area directly to the west.

These historic deposits have, more recently, been considered as analogous to the extensive copper deposits found in the Zambian copper belt (ZCB) and exploration efforts from neighbouring companies are heavily focused in this area.

Cohiba plans to investigate the potential for ZCB-style mineralisation over the Pernatty C area but believes there is still potential for IOCG deposits to occur at depth.

Meanwhile, the company reckons the IOCG potential at Lake Torrens is “compelling”.

Exploration work already undertaken by Cohiba shows a number of coincident gravity and magnetic anomalies that require further investigation.

A number of possible targets at Lake Torrens are associated with a major interpreted structural lineament, which is believed to be the bounding structure for BHP’s massive Olympic Dam IOCG deposit.

There is a huge amount of exploration activity in the Gawler Craton focused on IOCG mineralisation.

Cohiba has the opportunity to acquire interests in a number of additional IOCG target areas in the Gawler Craton.

The company said it was currently assessing these opportunities as they would significantly underpin its intent to become a major IOCG player in the region.

Chairman ups ‘skin in the game’

Cohiba’s chairman, Mordechai Benedikt, has stumped up more of his own cash to increase his stake in the junior copper explorer.

Benedikt paid $218,633 to pick up a further 12.9 million shares on market, boosting his stake to 7.23 per cent, from 5.77 per cent previously.

He became a substantial shareholder back in January after spending $843,694 in two separate transactions.

Copper market booming

The copper bulls are coming out in force with the continuing surge in the price thanks to increased demand and a looming supply crunch.

Goldman Sachs revealed itself as the latest copper bull, predicting a more than 60 per cent price hike in four years.

It sees copper reaching $15,000 in 2025, rising from around $9,000 a tonne currently.

Due to the importance of copper in infrastructure and in the clean energy transition that is ramping up, demand is expected to explode by up to 900 per cent to 8.7 million tonnes by 2030.

This article was developed in collaboration with Cohiba Minerals, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.