Midnight Sun Mining’s (TSXV: MMA) shares plunged late Thursday after it reported that the Zambian government rejected the renewal of its exploration licence that holds the Kazhiba target at its flagship Solwezi project.

Kazhiba is one of three licensed target areas within the company’s 506 km² property in Zambia that have had significant copper discoveries to date. It is underlain by a previously undiscovered basement dome similar to those at the Kansanshi mine held by First Quantum.

According to Midnight Sun, domes are believed to be associated with the copper mineralization at nearby mines, including both First Quantum’s Kansanshi and Sentinel mines as well as Barrick’s Lumwana mine.

The Kazhiba project features the high-grade 22 Zone, located 10 kilometres from the western mine gate of First Quantum’s Kansanshi mine complex. This zone was discovered by follow up shallow drilling in 2012 over a subtle copper anomaly with thick overburden. One discovery hole intersected 11.3 metres of 5.71% copper near surface.

This year, Midnight Sun had planned to further explore the target this year to define its copper oxide resources, as well as potential feed sources for the nearby Kansanshi mine under a cooperative exploration plan with First Quantum.

For this program, the Canadian junior said it had already submitted an application for renewal of the Kazhiba licence, which was due for its final three-year renewal allowed under Zambian mining law this year.

However, when Zambia’s mining licencing committee rejected the application in June, it did not deliver a formal notice to the company, and instead only published the decision on its website, Midnight Sun claimed. In addition, it said the ministry did not provide any explanation for the rejection, and even recently issued the licence area to a new entity.

As a result, the company has now suspended operations at Kazhiba, but expects to explore options to defend its exploration rights. “While we are disappointed in the current situation, we do believe it will be rectified, and we are taking all possible steps to expedite a swift resolution so that we can resume our exploration at Kazhiba,” stated Midnight Sun’s CEO Al Fabbro.

Meanwhile, Midnight Sun emphasized that its other two licences, each covering the Dumbwa target, which is under an earn-in agreement with KoBold Metals, and the Kansanshi-style Mitu target, also part of the cooperative exploration plan with First Quantum, are unaffected by this decision.

Exploration will move forward as planned at Mitu, which represents a bigger target Kazhiba that also hosts near-surface oxide copper. Previously drill at Mitu returned 11.6 metres at 3.44% copper.

Shares of Midnight Sun Mining fell 11.2% by market close Thursday, for a market capitalization of C$58.7 million ($43.5 million).

Source: MINING.COM – Read More