Deep-South Resources (DSM) - Targeting Large Copper Resource by Q4/21
Deep-South Resources is a mineral exploration and development company actively involved in the acquisition, exploration and development of major mineral properties in Africa.
We caught up with Pierre Léveillé, President & CEO of Deep-South Resources who has a large but low-grade Copper project in Namibia. They now need to raise enough money to deliver a resource in Q4 of this year, and also the PFS in the beginning of next year.
Deep-South is a TSX-V listed company and owns 100% of the Haib Copper deposit in the south of Namibia. Haib is the oldest porphyry deposit in the world and one of the largest in Africa. Deep-South recently disclosed a PEA over the deposit and at a price of copper of $3.00 / lb, it generates an after-tax NPV of $950 million and an after-tax IRR of 30%.
The Haib project is a large, low grade project which produced a robust PEA in December and Deep-South is now drilling the high grade section of the deposit. They have found high grade zones which will go towards a PFS in 2022 and a new resource estimate in October ‘21. Deep-South is also resuming heap leach testing which has been very successful so far.
Share Price Going Up, Copper Price Helping Out
Last time we spoke the share price was about $0.11 and is now up to about $0.23- $0.24 today which is good, but it is still only a $35M market cap company. The Copper price is working in their favour as the attention is back on Copper companies.
Any COVID-19 Restrictions in Namibia?
Covid hasn’t caused too many issues for Deep-South because most of their team is Namibian and 3 geologists are South Africans who have to pass a test before coming into the country 72 hours before.
Recent Raises: How Much, For What Reason, & Who Participated?
Deep-South has raised money recently in 2 tranches, 1 in October and another one in January, just a bit over CAD$7M so now they have a debt free balance sheet. They started their exploration programme with a little bit more than CAD$5M in cash and they have a drilling programme costing just under CAD$2M. They’re also starting some heap leach testing which will probably cost another CAD$1M. They are well funded to do everything they have to do by the end of the year which are important steps towards a Feasibility Study with a PFS on the way.
Relationship with Teck Resources: Potential Overhang?
Teck is a big shareholder of Deep-South and they have a good relationship. They are involved in the company as a passive shareholder and own 16% of the company but at the moment their real focus is on the western edge of the Americas, Chile, Peru, BC, but they participate in the technical side.
Importance of Bio Leaching: Process, Benefits, & Future Outlook
Deep-South has just made an appointment of Dr. Martinez Bellange, special advisor on bioleaching which is a low-grade primary sulphide project. The way to kickstart the leaching is to use bacteria to fix oxygen molecules on the sulphide and then oxidise the material so it leaches quickly. Mineral ore always has bacterial activity so adding bacteria will kickstart the natural bacteria that is already in the ore. In the Copper space, bioleaching is mainly used by majors in Chile.
In a typical operation a crusher takes the material down to about 12mm in size. They then use a technology called high pressure grinding using rollers that will crush the material below 5mm. This is put into stacks, layers of gravel, and sulphuric acid on top with the bacteria. Then the bacteria and the liquid will go down to the bottom and will oxidise and capture the metals in the material. Then there is a pad of liquid in which you have the metals, you take these metals and use electromagnetic treatment that will extract the metals from the pad, and produce cathodes, not a concentrate.
Drill Program & Results: How Much More Drilling Needed for the PFS?
Deep-South has produced some drill results at 0.47% CuEq over 152m including 30m at 0.81%CuEq. Molybdenum is also in there at about 10-15%. In the past, PEA and resource estimation, Molybdenum was not included in the estimate because there was only 14,000m with assay results out of a total of 66,000m. In this drilling programme, they have assayed for 33 elements, Gold, Silver, and many others, but specifically on Molybdenum and it has increased the Copper equivalent by about 10 to 15%. Indicated grade at the moment is 0.31% Copper but if Molybdenum is included, the Copper equivalent grade would be around 0.35%.
Deep-South has 66,000m of drilling planned and infill drilling is 10,000m after which they hope to reach the PFS stage. If that doesn’t happen, then it will be an updated PEA and for the Feasibility Study, they estimate they will need another 25,000m of infill drilling.
Growing the Next New Copper Project: Plans & Financing Them
Between now and the PFS coming out in early 2022, the company is fully funded, after which they will need to raise C$5-7m to fund the further 20-25,000m drill programme. The first goal for Deep-South is to improve the grade and the second goal is to improve the tonnage of the deposit with extra drilling to add value and transform the deposit into a serious Copper project for the future.
With the current electrification and Copper thematic, it is good timing for Copper companies and Deep-South is busy drilling now until mid-July and will have results coming out until mid-August. The company is also undertaking a scoping study at the project which is looking at alternative power, water usage, future impact study and assess the leach pad.