Nzuri ‘follows Friedland’ as it prepares to unveil Congo copper project
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Copper explorer Nzuri is scheduled to remove the wraps on a study of its Congo copper project this week, reports Tim Treadgold
“Following Friedland” is not a conventional exploration technique.
Nzuri’s Kalongwe project and Kakula — which is controlled by the Friedland-led Ivanhoe Mine — are both in the Katanga region of the Democratic Republic of Congo, a region famous for fabulously-rich copper deposits.
Cobalt, the hottest of the battery metals family which includes lithium, graphite and nickel, is also produced in large quantities in the region, which has a reputation for social and political unrest.
For investors with an ability to handle the risks associated with the Congo, what’s unfolding at Nzuri falls neatly into a category headed “watch this space”.
That’s because the ASX-listed stock has been in a voluntary trading suspension for the past week pending the release of a feasibility study into Kalongwe.
Wraps to be removed next week
The wraps are scheduled to be removed from the study early this week when investors will get a chance to re-rate Nzuri, which had been falling steadily over the previous four weeks to around 15c.
The sell-off in the stock could be related to the location of Kalongwe in the Congo, or the prospect of an equity-raising to fund the project’s development. It is unlikely to be related to the outlook for copper, or the potential for Nzuri to have a copper-coloured tiger by the tail.
What is known about Kalongwe and Nzuri makes for impressive reading — as does the track record of Friedland, the man who discovered the giant Voisey’s Bay nickel mine in Canada, and the even bigger Oyu Tolgoi copper mine in Mongolia which is now controlled by Rio Tinto.
Nzuri itself is the re-named Regal Resources. It’s biggest shareholder, and driving force, is a London-based private equity fund called Tembo Capital, which specialises in resource developments in emerging countries.
A co-founder of Tembo, Peter Ruxton, chairs Nzuri, bringing a deep knowledge of African copper deposits.
Mark Arnesen, the company’s chief executive, also has an extensive understanding of African copper through his past work with companyies such as Ashanti Goldfields and Equinox Minerals at its Lumwana copper project in Zambia.
Kalongwe, as it is currently understood before the release of the feasibility study, contains an initial resource of 302,000 tonnes of copper and 42,700 tonnes of cobalt in a setting believed to be amenable to quick, low-cost, development.
Perhaps more important than the copper officially classified so far as a resource of 11.7 million tonnes grading 2.7% copper and 0.64% cobalt, is the potential for much more to be found with exploration stepping up across 350 square kilometres of highly prospective tenement holdings.
Heart of the world’s richest copper belt
The location of Kalongwe not only puts it in the heart of the world’s richest copper belt.
It is only 15km from the Kakula deposit which is regarded as the world’s best undeveloped copper discovery and where Ivanhoe has 14 drilling rigs working to expand a resource which already stands at 116 million tonnes grading an eye-watering 6.09 per cent copper.
There is another aspect to Nzuri’s assets which will attract the interest of investors with an appetite for battery metals — and that’s the remarkably high-grade of the cobalt in the project’s ore.
At 0.62 per cent cobalt, Nzuri easily outclasses any other cobalt prospect being explored by an ASX-listed stock. The closest is Clean TeQ’s Syerston project in NSW with a grade of 0.1 per cent.
More should be known about Kalongwe and Nzuri’s development plans when the feasibility study is released.
But what seems likely is that the company will unveil plans for a lightning fast development process using simple ore upgrading technology such as dense media separation to produce a copper and cobalt concentrate grading up to 20 per cent copper and 2.5 per cent cobalt.
Initial mine life could be around five years with annual output the equivalent of 20,000 tonnes of copper and 1700 tonnes of cobalt.
The key to Nzuri is not so much what might be called a “starter” mine, but the potential for something much bigger in the future as exploration accelerates across an extensive and superbly located tenement package.
Katanga, and the Congo, is not every investor’s favourite location. But if you want copper with a cobalt kicker there is no better address.