Deep South Resources Looks to Restart Flagship Copper Project in Namibia

• Deep-South Resources (DSM) is awaiting a license for a copper project in Namibia.
• The project holds 850 million tons of copper with an average grade of 0.31%.
• Initial drilling results showed potential for grade increase by 40-50%.
• The Pre-feasibility Study (Pea) demonstrates strong economics even at the current grade.
• Deep-South has engaged in discussions with Namibia's Ministry of Mines and Energy, aiming to finalize the license application and resume drilling.

About Deep South Resources

Deep South Resources is a minerals exploration company focused on the acquisition, exploration and development of base and precious metal properties in Africa. The company’s flagship project is the Haib Copper project located in the south of Namibia. With strong management and proven expertise in developing projects in Africa, Deep South Resources provides investors with exposure to highly prospective copper assets.

Interview with President and CEO Pierre Léveillé

Deep South Close to Getting License Back for Massive Copper Project in Namibia

Deep South Resources has been engaged in ongoing discussions with the Ministry of Mines and Energy in Namibia regarding the renewal of the exploration license for its Haib Copper project. The company is optimistic these talks will result in the license being granted soon.

The Haib Copper project is a very large project with tremendous upside potential. As highlighted by the company’s CEO, the project hosts an estimated 850 million tons at an average grade of 0.31% copper, equating to over 5 billion pounds of copper. Importantly, drilling done in 2021, prior to the license decision, indicated the potential to increase the average copper grade by 40-50% to 0.4-0.45%. This would substantially improve project economics.

Based on a Preliminary Economic Assessment completed in 2021, the project already demonstrates robust economics at the lower 0.31% grade:

• Capital Cost of US$340M
• Operating Cost of US$1.34/lb copper
• NPV of US$1.3 billion at US$3.50/lb copper
• IRR of 35%

Significantly increasing the grade could boost these figures markedly. The company is eager to resume drilling once the license is renewed in order to prove up the higher grades.

Positive Discussions with Ministry Bode Well for License Renewal

In a recent interview, Deep South’s CEO provided an update on discussions with the Namibian Ministry of Mines and Energy regarding license renewal.

It was revealed that after meeting with the Minister in April 2022, the Minister directed his team to prioritize resolving Deep South’s license application and consider all facts presented by the company. Deep South subsequently submitted an updated renewal application on April 27 outlining its proposed work program and budget over the next 2-3 years, which includes completing a feasibility study.

The Minister advised that once Deep South filed the updated application, the Ministry would analyze it and make a renewal recommendation. Importantly, there were no conditions imposed by the Ministry. Deep South’s proposal will simply be reviewed.

The CEO noted that the analysis by the Ministry is nearly complete. A recommendation to the Minister is expected soon, which bodes well for Deep South to regain control of this highly prospective copper project in the near term.

Clear Strategy to Fast-Track Development

Assuming Deep South has its exploration license renewed in the coming weeks, the company has a clear strategy to advance the project quickly.

Several studies will be completed within 1-2 months, including water and power studies. The company will also prepare the site and repair infrastructure like roads.

Most importantly, Deep South is aiming to raise $2M to fund 5000 meters of drilling. This drilling will complete what was started in 2021 and provide the additional data needed to update the resource model and demonstrate the higher copper grades.

Further fundraising would enable more expansive drilling as well as a feasibility study.

Major Opportunity in Strengthening Copper Market

Deep South’s Haib Copper project offers exposure to copper at a time when copper supply is constrained while demand and prices remain strong. The outlook for copper is bullish, pointing to sizable upside for copper projects like Deep South’s.

The Haib deposit is already massive. Proving up significantly higher grades would make it a truly world-class project that major players would have great interest in. Savvy investors may want to position early while Deep South’s market cap remains low, currently around $7M. The share price has substantial upside leverage to renewed project development and resource expansion.

5 Key Takeaways for Investors

1. Flagship copper project in Namibia with over 5 billion lbs of copper.
2. Exploration license renewal imminent after positive talks with government.
3. Drilling has demonstrated potential to increase grades 40-50%, significantly boosting economics.
4. Clear strategy to fast-track development with drilling and feasibility study.
5. Undervalued with small market cap of $7M, providing leverage to resource growth and copper upside.

Conclusion

In summary, Deep South Resources presents a compelling speculation opportunity for investors seeking leveraged copper exposure. With the high likelihood of its exploration license being renewed in the near term, Deep South can restart development of its mammoth copper project in Namibia’s mining-friendly jurisdiction. The company has a clear pathway to demonstrating increased grades that could transform project economics. As it creates value through systematic exploration and development, Deep South’s share price should respond favorably, delivering outsized returns to early investors.

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