Bezant Resources: producing next year?
We're on the ground floor.
Good Morning Team, and welcome to another week.
Today, I wanted to take a few minutes of your time to consider Bezant Resources; when we first took a gander at the stock, it was trading at 0.018p per share - it’s now recovered to 0.030p - a rise of 67%.
I will warn that the company remains relatively illiquid with a sizeable spread, and therefore any investment may wish to be considered within a longer-term context.
On the other hand, the stock has barely moved in a year despite decent corporate progress:
The flagship
The majority of the company’s value resides within its 70%-owned Hope and Gorob Copper-Gold Project.
These mineral deposits are situated within the Namib Desert of Namibia — itself within the Swakopmund district of the Erongo region. Capital city Windhoek is roughly 250km northeast and Walvis Bay (Namibia’s main port) about 120 km northwest.
The entire project can be accessed via gravel roads.
The flagship has enjoyed significant exploration spend through nine different companies over more than a century.
Bezant itself has drilled 28 diamond holes over 2,680m across 2020 and 2023 — and a further 118 diamond holes were drilled by Kuiseb Mining covering almost 40,000m between 2006 and 2008. There was also significant drilling activity during the 1970s, and much of this historical work has been used to help derive the October 2023 MRE:
Completed by Addison Mining Services to JORC standard, the MRE now comprises a gross 15 million tonnes at 1.2% Cu, for 190,000 tonnes of Cu estimated across the Hope, Gorob Vendome and Anomaly deposits.
Breaking this down, the asset boasts:
An Indicated Resource of 1.24 million tonnes at 1.6% Cu and 0.4 g/t Au at the Hope deposit.
An Inferred Resource of circa 14 million tonnes at 1.2% Cu across the Hope, Gorob, Vendome and Anomaly deposits, including approximately 3 million tonnes at 1.7% Cu and 0.4 g/t Au at Hope.
It’s worth noting that this estimate ignored gold content (excluding Hope) as historic holes simply were not assayed for gold — however Addison did note that based on Bezant’s own drillholes, there could reasonably be gold grades averaging between 0.2 to 0.4 g/t Au across the asset — which given the current gold price could significantly impact on profit margins.
Addison also identified the potential for open pit extraction, with an open pit resource of 2.4 million tonnes — and also the potential (assuming favourable copper grades from further drilling) of increasing the size of the open pit amenable resource for a further 700,000 to 1 million tonnes.
For perspective, they consider that an open pit operation that could support five years mine life at an annual rate of 500,000 tonnes per year.
Further, it postulated that in the future, underground mining could be feasible by using a former concrete lined shaft with additional access from the base of the open pit — and that the 190,000 tonnes of contained copper in the MRE could be significantly increased both by drilling further untested areas, and also by drilling to increase gold credits to improve the CuEq grade.
These numbers have recently been more or less backed by the new technical report (keep reading).
Financial position
In interim results, Bezant generated a £487,000 loss after tax and held circa £156,000 in cash at period end on 30 June 2023.
On 2 October, the company raised another £250,000 from Kamino Minerals at 0.035p per share, at the time a 59% premium to the prevailing share price, with the proceeds to be used:
‘on the Hope Copper-Gold project in Namibia where we await the issue of a mining licence, to support finalisation of technical optimisation work and ongoing negotiations re pre-development contracts, financing offers and the acquisition of existing infrastructure expected to significantly reduce upfront capital expenditure and reduce lead time to production at the Hope & Gorob project.’
It’s also worth noting the Sanderson Capital Partners situation: on 5 March, Bezant agreed to extend the repayment date for the £700,000 drawn down under the unsecured convertible loan funding facility entered into with Sanderson Capital on 22 November 2021.
The £700,000 drawdown is now repayable by 31 July 2025 and convertible by the Lender at the fixed price of 0.06p per share. That’s roughly double the current share price.
No further amounts can be drawn down under the Facility. The Company has an option to convert all or part of the £700,000 drawdown if the Company’s share price exceeds 0.14 pence for 10 or more business days. Sanderson (and associates) owns 6.69% of Bezant’s shares.
On 16 October, Bezant noted that it had finally received the ‘notice of preparedness’ of the granting of Mining Licence 246 for the Hope & Gorob copper-gold project. At the time, Bezant noted that having this license granted was conditional:
‘only on the Company completing and submitting a written acceptance, which it is in a process of doing.’
With this written acceptance now submitted, Bezant is now waiting for statutory approval (this is Africa, as the saying goes, so expect the standard timeline!). But the key follow-up point is that the mining license is subject to the standard t’s and c’s under the Minerals Act - including:
‘undertaking an Environmental Impact Assessment, formulating for the Ministry of Environment and Tourism approval an Environmental Management Plan Report within six months from the date of the issue of the Mining Licence, and ensuring representation of historically disadvantaged Namibians.’
Bezant is dealing with these currently.
Chairman Colin Bird notes ‘We would like to thank the Ministry of Mines & and Energy for their hard work, diligence and professionalism and we look forward to working with the Ministry and its various departments as we prepare to build and commission the Hope & Gorob mine.’
Recent updates
On 1 November, Bezant announced a review of the gold mineralisation at the project - noting the elevated interest in gold credits attached to copper assets. For context, Hope’s mineral resource is in line with the typical 0.4g/t gold credit, which at the then gold price of US$2,700 per ounce contributes a gross value of approximately US$35 per tonne of ore at this grade.
While gold has come off its recent highs (thank Trump’s planned spending binge, tax cuts and tariffs ideas, ensuring US rates stay higher for longer and therefore reduce the metal’s attractiveness in the short term), the longer term picture remains bullish for gold.
The base reality remains that the major western currencies continue to devalue through inflation and sovereign debt - and this is likely to continue.
Bezant notes that taking this credit through to concentrate, having estimated processing recoveries (ore sorting and final concentration) together with refinery payability, it could represent a potential significant contribution towards mining and processing operating costs.
Most importantly, the gold contribution alone (subject to further drill confirmation at Gorob and other outlying deposits and the establishment of a mineable reserve) has the potential to cover both mining and processing costs.
Or in other words, the copper could be 100% profit. And Bezant now plans to engage in a little confirmatory drilling in high gold grade areas. For perspective, drilling completed over Hope, Gorob and Vendome reported peak gold grades for Hope including:
HPD004: 2.0g/t Au over 1.35m
HPD009: 2.57g/t Au over 0.3m
HPD010: 1.54g/t Au over 0.65m
Vendome VED001: 5.89g/t Au over 1.76m.
These gold credits represent by-product values of US$174, US$223, US$134 and US$512 per tonne respectively at a gold price of US$2,700 per ounce.
Further, peak historic gold intercepts achieved during the drilling campaigns pre-dating Bezant include notable intercepts of copper and gold:
HDD035 of 20g/t Au, 61g/t Ag & 16.8% Cu over 0.96m and 22g/t Au, 26g/t Ag & 3.98% Cu over 1.01m.
Historic grab samples collected on outcrop at Hope, Gorob, Vendome as well as other prospects along strike from Hope including Du Preez, Luigi, Gird and Bruna have also reported notable gold grades peaking at 6.76g/t Au.
Bezant plans to model an in-house theory that some high gold values are structurally controlled and linked to remobilisation and consequent upgrading of gold values. Successful modelling could influence future production, and the targeting of high gold values often associated with equally high copper grades.
Bird noted:
‘Hope and Gorob is primarily regarded as a copper Project, however the gold contribution is significant and, in certain areas of the deposit, in-situ gold values are as high, if not higher, than copper. This has led to a reassessment of the distribution of mineralisation resulting in the identification of areas with the propensity for higher gold contribution. This in turn will lead us to optimize pit contribution considering both copper and gold values. This is important to maximise early cash flow once the Project commences.’
Of course, this will all cost money, but one guesses that a financing or JV partner (or similar) to be announced, will be happy to stump up the cash.
On 7 November, Bezant started up Optimisation and Geotechnical Drilling:
Large diameter diamond core drilling to provide fresh mineralisation samples for ore sorting optimisation and modulation work and the collection of drill core for geotechnical assessment.
Final external review of operating facilities completed by specialist consultants, with the subsequent reports expected to confirm capital cost estimates and proposed metallurgical flow sheets.
External metallurgical engineers requested to provide plant configuration, operation options that would allow for an increase in plant throughput capacity.
Bird enthuses:
‘We are advancing all the underlying matters required to bring a mine into production and we are taking the opportunity to closely define the start point for the initial pit entry onto the Hope deposit. The objective is to maximise early cash flow as much as possible by predicting ground conditions and associated factors that might impact on mining and the optimisation and modulation of the various ore sorting technologies that will be applied.
The tasks are numerous and intensive, and the team should be complemented on the pre-licence work completed. This excellent progress to date has condensed and focused our programmes and more importantly defined critical paths. We also look forward to continuing exploration on our southern Matchless exploration licences that total more than 70km strike length, 17km of which occur within the Hope and Gorob Licence.’
Then on 15 November, Bezant noted it had received its commissioned technical report from mining consultancy Sound Mining International, focusing on the near-term development of the Hope Deposit where mining and processing are expected to commence.
Sound Mining is currently busy producing an updated mine design and production schedule to assist Bezant’s preferred mining contractors with detailed planning and scheduling.
Importantly, this study only focuses on the Hope Deposit. The good news is that the projected life of mine for this open pit and underground resource should provide enough time to undertake further infill drilling to test the deposits and prospects making up the known extension to the current Mineral Resource, potentially significantly extending mine life.
Let’s consider the maths:
Hope pit optimisation suggests a potential 2.4Mt of run of mine plant feed at a copper grade of 1.25% Cu and a gold grade of 0.25g/t Au, representing a five-year open pit operation at a production rate of 480ktpa.
An operating cost estimate of US$50.80 per tonne RoM is equivalent to an indicative cost per tonne of contained copper in concentrate of US$5,020.
The Hope Deposit Underground Mineral Resource estimate of 0.9Mt RoM at a copper grade of 2.04% Cu and a gold grade of 0.48g/t Au provides a further 4-year life of mine potential at a production rate of 220ktpa.
Preliminary mine design and production scheduling at the Gorob and Vendome Deposits indicates a further 1.01Mt RoM potential at a copper grade of 1.28% Cu and an additional 2 years of planned production at 480ktpa.
Before we go through the numbers, remember two things:
Bezant has a market cap of circa £3 million.
Bezant lacks the capital to develop the mine itself, and will need a partner.
However, that being said….
Copper is currently trading at $4.10/lb and gold at $2,600/oz. Given that there are circa 2,220 pounds to a tonne, and 31g to an ounce, it’s easy to see the attractiveness:
Open Pit (Hope Deposit)
Total material mined @ 2.4 million tonnes RoM
Copper grade of 1.25% - equals 2.4 million tonnes multiplied by 0.0125 - results in 30,000 tonnes of contained copper.
Gold grade of 0.25 grams per tonne. 2,400,000 tonnes multiplied by 0.25, results in 600,000 grams or 19,290 ounces of contained gold.
Assuming a copper recovery of 90%, copper recovery of 80%….
30,000 tonnes of copper, multiplied by 2,204.62 pounds per tonne, multiplied by 0.9 recovery rate, multiplied by $4.10/lb equals $243,399,300,
19,290 ounces of gold, multiplied by 0.8 recovery rate, multiplied by $2,600/oz equals $40,083,840.
Total revenue: $283,483,140.
Operating costs constitute 2.4 million tonnes multiplied by $50.80/t, which equals $121,920,000.
This leaves net revenue (profit, but will be tax etc) of $161,563,140 dollars for five years, or $32,312,628 per year.
That’s just the open pit. Let’s also consider the upside scenario:
Underground (Hope Deposit)
Total material mined @ 0.9 million tonnes RoM
Copper grade of 2.04% - equals 900,000 tonnes multiplied by 0.0204 - results in 18,360 tonnes of contained copper.
Gold grade of 0.48g/t - equals 900,000 tonnes multiplied by 0.48 - results in 432,000grams or 13,894ounces of contained gold.
18,360 tonnes of copper, multiplied by 2,204.62lb/t, multiplied by 0.9 recovery rate, multiplied by 4.10 dollars per pound, equals $148,970,907.
13,894 ounces of gold, multiplied by 0.8 recovery rate, multiplied by $2,600/oz, equals $28,875,712.
Total revenue: $177,846,619.
Operating costs are 0.9 million tonnes multiplied by $50.80/t, which equals $45,720,000.
This leaves net revenue of $132,126,619 for four years, or $33,031,655 per year.
Gorob and Vendome Deposits
Total material mined @ 1.01 million tonnes RoM
Copper grade of 1.28% - equals 1,010,000 tonnes multiplied by 0.0128, results in 12,928 tonnes of contained copper.
No gold is assumed from these deposits.
12,928 tonnes of copper, multiplied by 2,204.62 pounds per tonne, multiplied by 0.9 recovery rate, multiplied by $4.10/lb, equals total revenue of $104,924,970.
Operating cost is 1.01 million tonnes multiplied by $50.80/t, which equals $51,308,000, ergo net revenue would be $53,616,970, or $26,808,485 per year.
The bottom line
Interestingly, the maths indicates that Bezant is some way from the gold credits covering the costs - so one assumes there is already strong evidence these will be upgraded.
There is also the capex costs of getting a mining operation underway, of say, $15 million.
But the economics here are compelling: net revenue of >$160 million dollars for five years, or >$32 million per year from the open pit alone. There are also processing plants close by that the operation can take advantage of.
And production could start next year.