Deep-South Resources (DSM) - Legal Update & Zambian Schedule

Deep-South Resources Inc. is a Canadian exploration and development company, focused on its Haib copper project in the south of Namibia and the advancement of its three exploration licences in Zambia. The Haib copper project is located in the south of Namibia, close to the country’s border with South Africa.

The company is currently underway with a legal battle with the Namibian Ministry of Mines and Energy, caused by the refusal of the company’s renewal application for its Exclusive Prospecting Licence at the Haib copper project in June 2021. The company tried to convince the Namibian minister of mining, to review and revoke the decision stating that it had kept the ministry up to date with all its activities including receiving permits thereof from the ministry itself. The company filed an application with the high court of Namibia to review the decision of the Minister of Mines and Energy. The company also requested an interdict to prevent the ministry from granting a licence over the same licence area to any other party.

Deep-South Resources Inc. announced in early April 2022 that it had signed a definitive earn-in agreement with Zambian company World Class Minerals Venture Ltd. to acquire up to 80% of three copper exploration licences in the centre of the Zambian Copper belt. The agreement initially entails USD$ 30,000 in payments towards World Class Minerals Venture Ltd. as well as the issuing of 500,000 common shares of Deep-South Resources Inc. The company further plans on conducting a soil sampling program at its newly acquired Zambian projects in 2022.

The legal battle with the Namibian Ministry of Mines and Energy

Deep-South Resources Inc. is currently underway with a legal battle with the Namibian Ministry of Mines and Energy, regarding the refusal of the company’s renewal application for its exclusive prospecting licence at its Haib copper project in June 2021.

The Haib copper project is a 370 km2 land package in the south of Namibia, close to the border of South Africa. The project’s mineral resource estimate (MRE) hosts 3.1 billion pounds of copper in the indicated category and 2.2  billion pounds of copper in the inferred category. The project also boasts high-grade mineralisation totalling 140 million tons of copper. Various zones have shown mineralisation between 0.5% and 1.0% copper over intercepts of up to 150 m. The project is furthermore amenable to low-cost bio-heap leach operations and shows a robust preliminary economic assessment (PEA) which was conducted in 2020.

The legal battle with the Namibian Ministry of Mines and Energy started in June 2021, when the ministry denied the company’s application for the renewal of its exclusive prospecting licence. The Ministry at the time cited that the reason for the denial was the inability of Deep-South Resources Inc. to advance the Licence to Pre-Feasibility and complete the proposed drilling program as planned. Pierre Léveillé the President and CEO of Deep South Resources Inc. explains the situation as follows:

“…they mention all the time, all over their defence affidavit for 40-pages, which is that we failed to do a Pre-Feasibility Study, therefore we failed to do substantial work because you need to do substantial work to complete the Pre-Feasibility Study. That’s it. That’s the only thing they have to complain about. Now, when we replied to that, it’s pretty simple. First, we never proposed to complete a Pre-Feasibility Study. What we have proposed is to do metallurgical test work and drilling, and afterwards, if time is enabling that, we have proposed to start the Pre-Feasibility Study, not complete it.”

The company announced on the 23rd f June 2021, that it had met with the Minister for Mines and Energy of Namibia and discussed the refusal of the prospecting licence renewals. The meeting concluded with the Minister stating that he would review all the relevant documentation and reconsider his decision. The ministry on the 24of June 2021, reverted back to the company and stated that it would stand by its initial decision to refuse the renewal of the prospecting licence application for the project.

Deep-South Resources Inc. on the 21st of July 2021, announced that it had filed an application with the high court of Namibia to review the Minister of Mines and Energy refusal of the renewal of the Haib copper projects prospecting licence. The company further sought an interdict to prevent the ministry from granting a licence over the same licence area to any other party. The interdict was issued on the 1 of September 2021.

Various documentation was requested by the high court between November 2021 and June 2021, with the company filing its response to the defence affidavit of the Ministry of Mines and Energy on the 15th of June 2022. Léveillé sums up the recent activity of the legal battle as follows:

“…the Ministry of Mines finally filed their defence, and then we replied to their defence. After that, what happens is that we need to file what we call a case management report, which in fact, is just a summary of the defence and reply to the defence, and it serves for the hearing that comes this Thursday, June 30th, where the main goal is to establish the details of the final hearing, which we can call the trial.”

The company announced on the 5th of July 2022, that the final hearing regarding the review of the decision to refuse the Haib copper project’s exclusive prospecting licence would be held on the 3 and 4of October 2022. The company is to file its heads of argument by the 12 of September 2022, 15 days before the hearing, with the Minister of Mines and other respondents to file their heads of argument on the 19 of September 2022, 10 days before the hearing.

Léveillé explains that the Ministry of Mines and Energy did not follow the correct procedure regarding the refusal of the exclusive prospecting licence, he states:

“They have to go to a committee, get the recommendation from that committee, the mining commissioner has to make a recommendation to that specific committee - none of that has been done, and that’s in the Mining Act. What it makes is that they contravened the Mining Act and the Namibian Constitution.”

Deep-South Resources Inc. however still hopes to be able to settle the dispute out of court, which will enable it to continue working with the Ministry of Mines and Energy without a bitter taste in the mouth, Léveillé states:

“The other thing is that if we get the judgement from the court, the mood to work with the Ministry will not be the same as if we have a discussion with them and can walk out shaking hands and have an agreement and resume the work.”

Zambian Copper Exploration Licences

Deep-South Resources Inc. announced on the 7th of April 2022 that it had signed a definitive earn-in agreement with World Class Minerals Venture Ltd., a private Zambian company to acquire up to 80% in three large-scale copper exploration projects in the centre of the Zambian Copper Belt.

The three projects consist of the Luanshya West, Chililabombwe and Mpongwe projects. The Luanshya West project is a 54.24 km2 land position situated in the centre of the Zambian Copper Belt, which forms part of the Central African Copper Belt. The Chililabombwe project is situated in the north of the Zambian Copper belt and holds a land position of 22.5 km. The Mpongwe project is also situated in the centre of the Zambian Copper Belt and holds a land position of 675 km

The agreement consists of the payment of USD$ 15,000 on the signature of the agreement and a further USD$ 15,000 upon the approval of the transaction by the TSX-V. Deep-South Resources Ltd. will also issue 500,000 common shares to World Class Minerals Venture Ltd. upon the approval of the agreement by the TSX-V. The second anniversary of the agreement will see an additional USD$ 30,000 payment to World Class Minerals Venture Ltd. and the issuing of 250,000 more common shares of the company. The final 29% of the earn-in agreement will see Deep-South Resources Inc. pay USD$ 30,000 on the third, fourth and fifth anniversary of the agreement as well as spend a minimum of USD$ 1 million on exploration-related activities each year for a total of USD$ 3 million. Léveillé explains the company’s excitement regarding the projects, as follows:

“We’re very enthusiastic about Zambia and about specifically those licences. They are very well situated. The most northern one is 7 km from the Konkola mine on the exact same geology, on the extension of that geology, and Konkola is one of the largest copper mines in Africa, if not the largest. We’re talking about 500 million tons at 2.2%, so they’re producing 90,000 tons of copper per year, and it is high grade, it is large tonnage, and they keep improving or increasing the tonnage.”

Léveillé also states that the Zambian government is supportive of the country’s mining industry, and explains that the country has the aim to become the second largest producer of copper globally, he states:

“…the president says that he wants to, I think it’s quadruple the production of copper in Zambia. He wants to become number 2 in the world as a producing country in the next 4 or 5 years. It means that they will support quite a lot of companies and exploration and so on. It’s pretty exciting”

Future endeavours

Deep-South Resources Inc. is fully funded for the coming year, with no additional fund raises required. The company will continue in its legal battle with The Ministry of Mines and Energy of Namibia, the outcome thereof will provide a way forward for the company. Léveillé sums up the company’s position as follows:

“The good news for us is that everything we have to do for the next 10 to 12 months is covered, including G&A, the legal expenses in Namibia, and the work that we have to do in Zambia. We are well covered for that. We don’t have to raise money for 10 to 12 months.”

The company will also focus to advance its newly acquired Zambian projects, with Léveillé explaining that the exploration of the projects is not only alluring due to the Greenfields nature thereof, but also to the cost of exploration, he states:

“We don’t have to pay a lot of cash to the owners, and we don’t have to spend a lot of cash in the first year of exploration. Yes, it’s more greenfield, but at least we can start exploring in advance the development of the corporation around some very nice projects without spending too much money.”

Deep-South Resources Inc. further intends to spend USD$ 500,000 of its USD$ 1.5 million cash position on a soil sampling program at its Zambian projects in the coming year. The company further plans to regularly and clearly update the investment market regarding its intentions and endeavours throughout the coming year. 

To find out more, go to the Deep-South Resources website