MOD Resources set something of a record in 2016: it discovered the T3 deposit early in the year, then went on to define an initial resource and complete a positive scoping study in less than 12 months.

T3 is one of two deposits in the Botswana Copper Project:

T3                           28.4Mt @ 1.24% copper and 15.7g/t silver (MOD 70%);

Mahuma              2.7Mt @ 2.0% copper and 50g/t silver (MOD 100%).

The project is located in the Kalahari Copper Belt, which stretches across northern Botswana and into Namibia, as shown below. It is in Western Botswana, adjacent to the border with Namibia.



Botswana (population 2.1 million) is landlocked and lies to the north of South Africa. It is about the size of France, generally flat and its largest feature is the Kalahari Desert, which comprises 70% of the country. It gained independence in 1966 and has been stable ever since. It is the least corrupt country in Africa. Its main issues are a lack of water and a very high rate of HIV/AIDS.

It has strong economic growth, with a high degree of economic and political freedom. Like Australia, the economy is heavily dependent on mining. It is the world’s largest diamond miner, and diamonds account for around 1/3 of GDP. In addition to diamonds, copper, nickel, cobalt and coal are mined in Botswana.

In sum, Botswana is perhaps the best country in Africa for resource sector investment.

Board & Management

Julian Hanna is Managing Director. He was MD of Western Areas Limited (ASX: WSA) for many years. Exploration and development success saw this company peak at $10/share in 2008, after having risen from under $0.20 in 2002. Let’s hope he can duplicate his success at WSA with MOD.

The board is strong and experienced and includes the very highly regarded Mr Simon Lee AO. This is a team that will increase the odds of exploration success.

The Botswana Copper Project

While already hosting two copper-silver resources, there is much more to be found over this huge project, with numerous targets yet to be drill tested, as shown below. Most of the project is in joint venture (MOD 70%) with Aim-listed Metal Tiger Plc (AIM: MTR).

I suspect that the T3 deposit is just the tip of the iceberg. MOD’s more advanced neighbour along strike, Cupric Canyon Capital, has total copper resources of over 400 million tonnes.

The Scoping Study completed on T3 last year is based upon an open pit to a depth of 220 metres and a treatment rate of 2mpta. At a copper price of USD2. 53/lb, the base case shows an average annual pre-tax cashflow of USD44M (USD31M to MOD) and a Net Present Value (“NPV”), at 10% discount rate, of USD180M (USD126 to MOD).

This is an excellent result that gives a 10 year mine life without any further discoveries. The Scoping Study is quite conservative and the forthcoming Pre-Feasibility Study is likely to show an improved NPV.


Map courtesy MOD Resources


The current market capitalisation (AUD60M at $0.038 per share) probably fairly reflects T3 at its current, early stage of development. However, I think there is substantial upside from here.

The company also has the Mahumo resource; small and high grade, but still open at depth. Most importantly, the project hosts numerous geochemical and geophysical anomalies that are in comparable settings to T3. The probability of further discoveries is very high. If Cupric Canyon is any guide, MOD could increase its resource base tenfold.

There are other areas of upside, such as the copper price. At a copper price of USD3.00/lb the NPV for T3 is USD297M. That is; an 18.5% increase in the copper price leads to a 65% increase in NPV. Now that is leverage.

MOD is one of the best quality copper plays listed on ASX. I think the company is fair buying at the current price on T3 alone, everything else is free carried.



My “Worth Watching” series is a brief review of corporate presentations that appeal to me. They are not based on in-depth research and are in no way a recommendation to buy or sell shares. The reader is advised to do their own research and/or consult with their broker.