Shares of Tsodilo Resources were rising on Tuesday after the company released the highly anticipated maiden resource for block 1 of its flagship Xaudum iron project in northwest Botswana. The NI 43-101 technical report revealed an inferred mineral resource of 441 million tonnes with an average grade of 29.4% iron.
The company's shares advanced 2.6% to Canada $1.20 in Toronto on Tuesday, pushing year-to-date gains to 60%. "We are delighted to say that we have defined large mineral resource tonnage in the Block 1 area of 441 Mt," said chairman and chief executive officer, James M. Bruchs. "This is a major step for the project and confirms that the Xaudum Iron Project can be a major iron ore project for Botswana."
The chief executive said the project also has the potential to supply iron ore to the whole southern African region as well as the world, as the current resource is only the "tip of the iceberg". This is because the entire project has an exploration target of 5 to 7 billion tonnes of iron, with grades ranging between 15% to 40% iron, according to a report released in January. Block 1 is just one small area of the Xaudum Iron Formation mineralization, suggesting significant potential for expansion through further exploration.
Indeed, the company is now drilling the next exploration area, referred to as block 2A, where it expects to define a significant inferrred mineral resource in due course, it said, which will greatly increase the project's total mineral resource estimate. The current estimate, which was prepared by SRK Consulting, is based on drilling of 157 holes, or some 31,150 metres within the block 1 area. Tsodilo began exploring the project region in 2008.
The company also said Tuesday that metallurgical testwork carried out on drill core composites indicates that a high grade magnetite concentrate could be produced, with an average magnetite concentrate grade of between 67.2% and 68.5% iron dependent on grind size, according to Tsodilo's statement released earlier this morning.
The metal licenses that cover the company's iron ore project also extend to its copper properties in Botswana, which are under joint venture with First Quantum Minerals (TSE:FM) (LON:FQM), a major copper producer that has taken a near 8% stake in Tsodilo under an agreement signed in April last year.
In July, Tsodilo said it negotiated a deal to raise $800,000 via a non-brokered private placement financing of units, with proceeds to be used for working capital needs.