Kaoko Metals shares surged 145% on the Australian Securities Exchange on Wednesday after the company’s first drill holes at its Chalkos project in Namibia intersected broad zones of visible copper mineralisation, despite laboratory assays still being several weeks away.
The shares closed at A$1.80, up A$1.065 from the previous close of A$0.735, after climbing as high as A$2.28 during trading.
At the intraday peak, Kaoko traded at more than three times its previous closing price as investors rushed into the newly listed explorer after the release of results from the first two diamond holes drilled at the Otniel prospect.
The rally followed Kaoko’s announcement that hole DDOT002 intersected 60.25 metres of visible copper mineralisation from 36.65 metres down-hole, including 32.36 metres described by the company as strongly mineralised.
The first hole, DDOT001, encountered 51.83 metres of visible mineralisation from 39.27 metres, including a 17.2-metre section of strongly mineralised material.
The drill core contained copper minerals including chalcocite, cuprite, malachite, native copper, dioptase and chalcopyrite.
The results are particularly significant for Kaoko because they came from the first two holes of the maiden drilling programme at the 800 km² Chalkos Copper-Silver Project, giving investors their first indication of what lies beneath targets previously defined largely through surface exploration.
However, the scale of the share-price reaction has run considerably ahead of the laboratory results needed to establish the actual copper grades.
Kaoko has cautioned that visual estimates of mineral abundance are not substitutes for laboratory analysis and cannot be used to determine copper grades or the mineralisation’s potential economic value.
Samples from DDOT001 and DDOT002 are being processed, with assays expected within four to six weeks.
The first two holes were also drilled from a common drill pad, meaning they do not yet establish how far the mineralised system extends laterally across Otniel.
Kaoko is now drilling DDOT003, which is designed to test continuity away from the first two intersections, while DDOT004 and DDOT005 are planned to test extensions to the west and south.
The company is also investigating bringing an additional diamond drill rig to Chalkos as it expands the exploration programme.
Once the planned drilling at Otniel is completed, the current rig is expected to move to the Donkey Hill prospect, where Kaoko has previously identified high-grade copper mineralisation at surface.
Managing director Gerard O’Donovan described the first two holes as an encouraging start but stressed that the company is still waiting for the initial assays.
The sharp market reaction now puts greater attention on those laboratory results.
While investors have already placed considerably more value on Kaoko following the visible copper intersections, the assays expected over the next four to six weeks will provide the first definitive measure of the copper grades encountered by the company’s drilling at Chalkos.
Kaoko only commenced trading on the ASX in May this year, making the dramatic rise following its maiden Namibia drilling results particularly significant for the explorer.
The ASX classified its latest announcement as price-sensitive.
