Power Metal elects to earn in to Molopo Farms Complex

Metals exploration and development company Power Metal Resources has provided written confirmation to Kalahari Key Mineral Exploration (KKME) that it has elected to earn in to a 40% interest in the Molopo Farms Complex project, currently 100% owned by KKME, it announced on Tuesday.

The AIM-traded firm said that, to earn in to the 40% Molopo Farms Complex project interest, it must spend $0.5m on project related expenditure to support drilling of key nickel-copper-platinum group metals targets in 2020.

It said that spend requirement was fully covered by its existing cash resources.

In addition to the 40% direct project interest that would be allocated on completion of the earn in, Power Metal also held 18.26% of KKME equity, and as a result, upon earn-in completion, it would hold an effective economic interest of 50.96% in the Molopo Farms Complex project.

“Progress achieved at the MFC project has been very encouraging in 2019, with the helicopter airborne electromagnetic work delivering 17 subsurface conductor targets and the ground geophysics highlighting five key targets for initial drilling,” said chief executive officer Paul Johnson.

“In recent weeks we have held a number of meetings and discussions with the KKME team and there is clear and growing confidence in the potential of the MFC project for a nickel discovery.

“We are now working with the KKME team on preparations and options for an upcoming drill programme and will provide further updates to the market as material developments occur.”

Johnson said exploration drilling of the nature the company planned to support was high risk, although the in-depth preparatory work undertaken by KKME had helped to mitigate that risk and increase the chance of success.

“That said, I also want to be clear why we are enthusiastic and have decided to proceed with the earn in opportunity.

“It is rare for investors in the junior resource space to have exposure to near term drill campaigns that could have the potential to yield a large-scale nickel sulphide discovery and we believe that the Molopo Farms Complex project is one such opportunity.

“If exploration work proves to be successful, the potential valuation of the Molopo Farms Complex project could rise dramatically and the project could attract considerable interest from larger mining companies, as evidenced by the interest already shown to date and by the companies that hold ground in the vicinity of the Molopo Farms Complex project.”

At 1209 GMT, shares in Power Metal Resources were up 11.43% at 0.39p.