Boseto Mine sale talks inch forward
Keikantse Lesemela | Friday December 5, 2014 08:28
The company has entered into a US$5 million short-term working capital facility with Cupric. A condition to the facility agreement grants Cupric a period of exclusivity to allow it to complete due diligence, and to allow time for both Discovery Metals and Cupric to finalise and agree definitive terms of the potential transaction.
In a statement released on Wednesday, Discovery Metals country manager Botswana, Mokwena Morulane, said the exclusivity period extends until the execution of legally binding sale and purchase agreement with Cupric. “DML will be required to seek approval from its shareholders prior to any transaction with Cupric being finalised. These approvals will be sought from the relevant regulatory government authorities in Botswana and elsewhere,” he said. Cupric Canyon Capital LP, which is owned by its management and the Barclays Natural Resource Investments division of Barclays, is focused on acquiring interests in undeveloped copper assets with a known resource and adding value to them by assisting in the advancement of the projects through the stages of development, construction and operations. The company completed the acquisition of Hana mining, which controls five prospecting license blocks in Botswana covering 2,149 square kilometres in area, situated south of Maun. The facility will be used to provide support to DML’s current operations arising from operating cash-flow shortfalls in November 2014 and for working capital purposes. The company’s existing project finance lenders are supportive of both the potential transaction and their facility agreement.
The terms of the facility include a US$3 million in immediately available funds, a further US$2 million available from January 31, 2015 among others.
Developed at a cost of P1.2 billion ($175 million), Boseto Zone is part of Discovery’s Kalahari Copper Belt prospecting area-covering 9,656 km2.
Recently DML announced plans to raise up to P213 million from shareholders to fund Boseto mine’s transition into an underground operation. Since commissioning it in 2012, DML 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.
Discovery’s major assets in Botswana are Boseto and Dikoloti in the North East District, which is a joint venture with the Japan Oil Gas Metals & Energy Corporation (JOGMEC), who have earned a right to 60 percent of the project.