By Dr. Michael Green
With diamonds, heavy minerals sands (imminently hopefully), tantalum, lithium and rare earths, there is so much going on at Kazera that it is easy to forget some of the other interests held within the company’s portfolio.
That’s right, there is more to Kazera which could come to fruition. Eighteen months ago the company put out this RNS HERE in which it unveiled that it had entered into a Memorandum of Understanding (MoU) with Manschaft Mining and Energy, a company which holds five exploration and prospecting licences (EPL), in the central and north-western sections of Namibia.
This MoU looked as though it could pave the way to the company partnering with Manschaft to exploit the mineral potential of each of these EPLs. When this deal was announced it was pointed out that Manschaft had granted the company an exclusive right to evaluate each of the EPLs, which were valid until October 2024. Also, there was no obligation on the company to pursue the EPLs or to expend any capital except for its own human resources in analysing the relevant data and conducting site visits. In many other small cap resource company such an interest would be its flagship asset. This illustrates to us just how much strength in depth there is at Kazera and that still remains, in our opinion, totally overlooked by investors.
Basically, these licence areas include more tantalum, along with gold and copper projects in the well-known Kalahari Copper Belt. Plus, there is also a cobalt, copper and iron EPL on the Kaoko Copper Belt. However, our focus is on EPL7238 where proven resources exist which are suggested to include tantalum, lithium, tin and niobium products and where small-scale miners were then in operation.
EPL7238 is located 3 hours from Windhoek, 4 hours from the international airport and 3 hours from Walvis Bay shipping port. Importantly, when this deal was first announced it was pointed out that the Tantalite Valley Processing Plant would be capable of processing these minerals. With the new lithium investor at TVM, along with the company’s new REE play direction, it does look as though EPL7238 might one day play an important role in the further development of the group as well as offering opportunities to others. There thus looks to be plenty of scope to substantially broaden the company’s interests both in lithium and REEs.
The Manshaft JV was a move by an earlier management team to secure more exploration licences. It is a five-year deal and is still here and it does seem that the current management believe that EPL7238 could warrant some drilling. With the known presence of niobium it would be a crime not to do some low cost exploratory drilling to try and get a handle on the magnitude of its potential given the import of this rare earth element these days.
Recent years have seen investors flocking to rare earth stocks like moths to a flame, creating some bumper corporate valuations. Well, along with the rare earth elements on the list of critical metals are also tantalum and lithium. There is no doubt that China has a strangle hold in the global supply of critical rare earths as the country dominates some 80% of the world supply of these materials this increasing the scarcity value of these companies holding these valuable resources.
Without REEs, you can in fact kiss goodbye to much of today’s hi-tech wizardry. This is because magnets incorporating REE are essential in creating engines that power electric vehicles, along with the motors that go inside wind turbines. That is not to mention the guiding systems contained in missiles. Given all this, it is little surprise that the US, Australia and the UK are investing heavily to develop new REE refineries in a move to break the Chinese monopoly.
There is no doubt that rapid progress is being made right across each and every one of Kazera’s operations – and now there is the added excitement of REE to come as well. Going forward it looks as though the news flow won’t disappoint.
Diamond production in South Africa looks like it will be now shifting up a gear or two following the arrival of the Pan Plant onsite at the company’s concession in the Alexkor diamond fields. At TVM, a lot of interest has been shown in the lithium and last week we learnt that US$7.5 million is being invested into that project. On top of this, the granting of the HMS Mining Licence could practically come at anytime. The new REE interests in Kenya could see a JORC-compliant resource for Buru Hills announced by the year end, an event which we believe could generate a very serious re-rating of the shares.
We initiated coverage on Kazera with a Conviction Buy stance in early August 2020 at 0.70p with a target price of 2.50p. Given the swiftly changing fortunes at the diamonds and the tantalum plays last week we revised our target price to 4p per share. That said, we are currently working on a full update note when the valuation and target price will be revisited. At the current price of 0.976p, we are more than happy to confirm our Conviction Buy stance.
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