DML seeks cash to take Boseto underground
Staff Writer | Tuesday September 2, 2014 11:50
The Botswana Stock Exchange (BSE) listed company, yesterday unveiled its intention to undertake a two for one renounceable rights issue at A$0.02 per new DML share issued and one option for every new DML share issued under the rights issue.
This means every DML shareholder will be granted an uncompelled chance to buy one new share for every two already held.
The rights issue is conditional on raising a minimum of A$10 million (P83 million) and will raise up to a maximum A$25.76 million (P213 million).
According to the company, this recapitalisation is aimed at funding the transition from open pit operations to underground mining at the Boseto copper mine near Maun.
“ This move is an important step as the mining of consistent higher grade sulphide ore, together with a continued focus on costs should bring stability to operating performance, deliver profitability and significantly improve long-term investment returns for the company’s shareholders “Within a two year period we are aiming to have commenced two declines at the Zeta Underground Mine, with ultimately three underground mines to be developed at Boseto. This will allow the concentrating facility to be filled with higher grade sulphide ore, leading to significant improvements in the recovery of copper and the overall tonnes of copper produced on an annual basis,” DML Chairman Jeremy Read said.
In addition to using the funds raised by the rights issue to fund the development of the Zeta Underground Mine, the company will complete resource drilling at Zeta NE for future underground developments and also pay some debts.
The rights issue price A$0.02 per share represents 47% discount to the 30-day volume weighted average price for the Company up to and including 28 August 2014.
The Australian based Copper miner was in April granted approval for the development of the Zeta underground mine by government after amendment of the mining licence at Boseto to include the underground mine.
The establishment of the Zeta underground mine is expected to significantly lengthen the life of the Boseto operation while also providing a longer and consistent access to the high quality mineralisation.
At steady levels, the Zeta underground mine would produce about 1.5-million tonnes a year, at 1.3 percent copper. DML’s ultimate objective is to be able to supply sufficient ore from three planned underground mines to keep the 3.2-million-tonne-a-year Boseto concentrator at maximum throughput and efficiency.
For the financial year ended 30 June 2014, the Boseto operation produced 48,207 tonnes of concentrate containing 18,732 tonnes of copper and 628,890 ounces of silver. This was an improvement on the production results achieved in the financial year ended 30 June 2013 in which 37,766 tonnes of concentrate were produced containing 14,870 tonnes of copper and 670,752 ounces of silver.
Since commissioning in 2012, the company has been plagued by operational and financial challenges as low copper prices coupled with low ore grade recovery pulled the company finances into the red. Two attempts to recapitalise the company in the past two years have also fallen through throwing DML further into debts. Early this year, the company axed 85 jobs as part of a restructuring exercise to bring down costs.
(Exchange rate used 1A$-P8.3)