BHP has entered into an earn-in agreement with Cobre to invest up to $25m (A$39.6m) in exploring copper-silver deposits at the Kitlanya projects in Botswana.
This investment focuses on Cobre’s Kitlanya East and Kitlanya West copper projects on the Kalahari Copper Belt’s basin margins.
The agreement follows Cobre’s participation in the 2024 BHP Xplor programme, which funded a seismic survey at Kitlanya West.
Under the agreement, BHP will provide a minimum of $5m within two years, with a planned budget of $7m for exploration at the Kitlanya projects, starting in April 2025.
The exploration will include deep diamond drilling and 2D seismic surveys to evaluate the mineral system for Tier 1 copper deposits.
Drilling mobilisation is set for April 2025, targeting areas identified in the 2024 seismic programme.
BHP will also have an option to earn a 75% interest in the Kitlanya projects by investing $25m, including the initial $5m.
Cobre Botswana will serve as the operator during the earn-in phase, receiving an annual management fee of at least $250,000.
The agreement excludes Cobre’s Ngami and Okavango copper projects, which Cobre will continue to develop independently.
Cobre CEO Adam Wooldridge said: “This significant transaction with BHP is a major moment in time for Cobre as a company as well as a testament to the success of BHP’s Xplor programme.
“The partnership with BHP will provide us with the funding and support necessary to implement a technology-driven work programme designed to discover the Tier 1 deposits we believe may be hosted in our Kitlanya East and West projects. Independently, Cobre will continue advancing its Ngami and Okavango copper projects.
“This combined strategy provides exposure to potential Tier 1 discoveries, a development opportunity at Ngami and short-term discoveries on our Okavango project.”
Upon forming a 75:25 joint venture (JV), BHP may offer Cobre a loan for its share of JV expenses until the final investment decision.
The JV is also subject to an agreement which specifies that, should a participant’s share in the venture decrease to less than 10%, the other participant will have the right to buy that party’s interest at its fair market value.
An additional $10m is payable to Cobre if a JORC-compliant mineral resource is declared at the Kitlanya Projects.
If the agreement ends during the earn-in phase, with BHP funding at least $20m, BHP will receive a 2% net smelter royalty on the Kitlanya Projects. Cobre can buy back 50% of this royalty under specific conditions.
BHP Group exploration officer Tim O’Connor said: “We are thrilled to continue our partnership with one of the BHP Xplor alumni, Cobre Limited, through this agreement. This collaboration reflects our excitement for the exploration potential in Botswana and underscores the high standard of partnerships we see coming out of the BHP Xplor programme.
“The Kitlanya projects in Botswana represent an exciting opportunity to uncover Tier 1 copper-silver deposits, and we are pleased to contribute our expertise and resources to this venture.”
