Baobab Resources (LON:BAO) emerged among the top risers in the mining sector this morning, advancing 6% after announcing the latest drilling results from the South Zone of its Tete project in Mozambique.
The intercepts included 15 metres grading 62.2 percent iron and 0.64 percent vanadium oxide, 90 metres grading 59.4 percent iron and 0.6 percent vanadium oxide, 20 metres grading 60 percent iron and 0.69 percent vanadium oxide and 22 metres grading 56.7 percent iron and 0.49 percent vanadium oxide.
The company is planning step out reverse circulation (RC) drilling with sequence of 7 mineralised zones over a 2 kilometre strike length.
Thus far 33 holes totalling 4,500 metres have been completed and all areas drilled have returned substantially wider zones of mineralisation than expected.
The report was met with a positive response from investors as well as brokers, who pointed out it’s not just the strong drilling results that make the project attractive.
Fairfax noted that Tete stands out among similar projects as it has many benefits that other iron ore targets do not, including cheap power nearby and the activities of other miners that are expected to rapidly improve the logistical infrastructure in the region, further enhancing the value of Tete.
Broker Northland Capital Partners called the report “another strong announcement for the company in what we expect to be a steady stream of newsflow given the expedited programme.”
“The South zone continues to deliver beyond expectations and has now returned strong results from the Northernmost and Southernmost prospects. The company looks well on course to delineating a substantial resource upgrade this year,” said Northland.
The broker added that the additional Monte Maunde prospect provides potential resource extension outside of the original 400-700 million tonne (Mt) target.