Zambezi Resources has a useful friend in Glencore

Zambezi Resources has a useful friend in Glencore
By Jack Hammer
Wednesday May 16, 2007 [08:49]

Sam Nujoma, former president of SWAPO and one time leader of Namibia, visited Zambezi Resources offices in Lusaka recently. Nujoma is doing a degree in geology and was looking for helpful hints and practical insights into a working mining company office. It remains to be seen whether or not it’s a sign of a toppy market that the former leader of armed resistance to South Africa in Namibia is entering the mining business at the right end of a rockhammer.

But he’ll have got his insights at Zambezi alright. Zambezi’s offices are decent enough. There’s an expensive coffee machine, a pool out back, and plenty of anti-AIDS literature scattered all over the place. But most of the space there is - as it should be - given over to map tables.

On the walls are the rosters for the company geologists, detailing which of Zambezi’s many projects they’ll be working on and when, and the names on those lists ought to make welcome reading for a famous African nationalist: Boniface Nguni, Giddy Mwale, Titus Mabeseru and Nhamo Manenji. For a small company, Zambezi does a good job of promoting local talent. All the senior geologists are Zambian. And, with Zambezi’s results to date, it has to be said that it looks like they know their job.

Perhaps the real reason for Nujoma’s visit was to check out his likely future bosses.
Nujoma might be ahead of the pack in focussing on a company with a portfolio well outside of the traditional mining comfort zone in Zambia, but he’s not the first, nor with all due respect, the most significant player on the international scene to take an interest.

It was a real step up for Zambezi last year when a joint venture with diversified commodities giant Glencore was mooted. It took some serious paperwork to finalise, but the deal was eventually signed off in February this year and sealed with a “1m placing of Zambezi shares to the Swiss-based giant.”

Glencore’s principal interest is the Cheowa project, a copper-gold property close to the Zambezi River. At the moment Cheowa boasts an inferred resource of 1.7 million tonnes grading 1.5 per cent copper and 0.5 g/t gold, but with Glencore planning to spend US $10million on Cheowa over the next two years, Zambezi chief Julian Ford is upbeat about its prospects.

The plan is to do 60,000 metres of drilling this year, after which the resource numbers ought to look very different. “We’re very confident this project’s going to work out,” says Ford. “I don’t see any critical flaws. Every hole has hit mineralisation exactly where we expected. Glencore is very keen to put it into production.”

With a structure in place for funding Cheowa all the way through to feasibility, Zambezi can direct its cash towards other projects. And there are plenty.

There’s the new Kangaluwi-Chisawa copper prospect, on which 25,000 metres of drilling will take place this year; the Chakwenga gold project, where grades go as high as 6 g/t, and on which just over 8,000 metres of drilling is planned; there’s another property that Glencore has taken an interest in, as well as three other gold targets and a uranium target.

To fund all that work, Ford plans to raise US $10 million to add to the US $1.7m already in the bank. From here on in though, an increasing proportion of the money raised by Zambezi will come out of Australia, where the company has just listed.
“It’s a risk mitigation strategy,” says Ford.

London, he thinks, has become overly obsessed with cash flow, partly because it paid too much for assets in the first place.

That means the squeeze is on explorers, and he wants to have somewhere else to turn if the money dries up completely.

“Good projects will always find money,” he says, but perhaps not always in London.
Paladin, he reckons, is a case in point: “John Borshoff survived for years on the smell of an oily rag. I dare say he wouldn’t have survived in London.”

Perhaps London just isn’t as much as a pushover as it used to be. But one way or another Ford aims to keep his geologists in the field for as long as possible, and maybe even one day offer Nujoma a job. - Minesite