Power Metal Resources PLC (LON:POW) will take up the offer of a 40% earn-in interest in the Molopo Farms metals complex in Botswana, where airborne surveys have located five key targets for initial drilling.

Power Metal has confirmed to its project partner that plans to take up a 40% project interest of Molopo, which is currently 100%-owned by Kalahari Key Mineral Exploration Pty Limited (KKME). 

WATCH: Power Metal’s Paul Johnson details 2020 ambitions and wider market expectations

To do this, Power Metal, which already owns an 18.26% equity stake in KKME, needs to contribute US$500,000 to the costs of drilling key nickel-copper-PGM targets in the coming year.

Earlier this month, the coffers were filled with a £700,000 share placing and subscription.

When the earn-in is complete, the AIM-listed company will hold an effective economic interest of 50.96% in the project.

“In recent weeks we have held a number of meetings and discussions with the KKME team and there is clear and growing confidence in the potential of the MFC project for a nickel discovery,” said Paul Johnson, chief executive officer of Power Metal Resources, in a statement on Tuesday.

He said talks were ongoing with KKME over options for the upcoming drill programme, with updates to be provided when the plans are finalised.

“I would like to be clear that exploration drilling of the nature we plan to support is high risk, albeit the in-depth preparatory work undertaken by KKME helps to mitigate that risk and increase the chance of success,” Johnson added. “That said, I also want to be clear why we are enthusiastic and have decided to proceed with the earn in opportunity.  

“It is rare for investors in the junior resource space to have exposure to near term drill campaigns that could have the potential to yield a large-scale nickel sulphide discovery and we believe that the MFC project is one such opportunity.

“If exploration work proves to be successful, the potential valuation of the MFC project could rise dramatically and the project could attract considerable interest from larger mining companies, as evidenced by the interest already shown to date and by the companies that hold ground in the vicinity of the MFC project.”