P300m bid to buy Boseto Mine
Boniface Keakabetse | Wednesday May 13, 2015 18:04
DML was early this year placed under provisional liquidation after failing to meet its financial obligations amounting to over $149 million (P1.49 billion) to various creditors.
Deloitte Botswana, the liquidators of Discovery Metals Limited (DML) Boseto copper mining, have revealed that a meeting will be held in June where creditors will decide whether a bid for the Boseto mine by Cupric Canyon, which also owns Khoemacau mining in the North West, has been successful.
If the bid were to be accepted, it would mean creditors would receive as little as 20 cents for every dollar they are owed by Discovery.
Director of tax services at Deloitte, Terry Brick said creditors will hold a meeting on 12 June 2015.
“If the offer is accepted then the creditors will be paid their share and Cupric will own the mine, the mine plant and machinery. Cupric is offering US$31 million excluding the mobile fleet being the dump trucks and large mobile machines,” he said.
The $149 million total liabilities is made up of $115 million owing to banks and $34 million to other creditors.
According to Brick, if the offer is rejected they would have to look for other interested parties. He, however, said the process could drag on at this stage because at the present time the international price of copper is low and is expected to stay that way for a few more years.
“This makes marginal copper mines commercially unviable. Also in general, the mining industry worldwide is struggling so there are not too many buyers out there. But it is up to the creditors to decide whether to accept or not, ” he said.
By an order of the High Court of Botswana made on March 9, 2015, pursuant to an application made by Standard Chartered Bank, Deloitte, was appointed Provisional Liquidator of Discovery Copper Botswana Pty Ltd and Discovery Mines Pty Ltd (both registered in Botswana), being wholly owned subsidiaries of Discovery Metals Limited (Administrators Appointed). DML Board of Directors also subsequently appointed Stefan Dopking and Michael Ryan of FTI Consulting as Voluntary Administrates of the Company. The creditors syndicate comprised Standard Chartered Bank, Credit Swiss and Caterpillar Finance including Cupric Canyon, which is eyeing the takeover. DML’s Lender Group demanded full and immediate repayment by DML of all monies (comprising principal repayments, interest, and costs). The Boseto mine, which is still virtually new, cost about US$200 million (P1.9 billion) to build. Chief Executive Officer of Botswana Chamber of Mines, Charles Siwawa said in an interview that he is hopeful the mine would get a new buyer. “The project is viable; it is only that DML ran out of cash to meet their running costs.”
According to Siwawa, DML at one point searched in vain for a buyer and had to ultimately borrow money from Cupric Canyon which is still owed by DML and is now bidding to take over the mine. He concurred that the drop in world copper prices further worked against DML.
He added that the construction of a multimillion Pula power transmission lines by the Botswana Power Corporation (BPC) would address electricity woes of the base metals miners in the northern part of the country. He was referring to a transmission line project from Mawana to Toteng and from Toteng to Shakawe.
Part of the project also entails the design and construction of a high voltage line from Toteng to Shakawe and Toteng to Ghanzi, and substations at Gumare and Shakawe.
Siwawa said the BPC project would solve the power woes. “The transmission line is expected to reach Maun in 2017 and Toteng in 2018 and will solve mining power demands for the current and future mining projects,” he explained.
During operations, DML reportedly spent P26 million every month to fuel the diesel generators at Boseto to power the mine. Khoemacau Copper Mining, formerly Hana Mining, has announced plans to start mining at its Somelo settlement site in 2016. While Tsodilo Resources, which has been searching for iron in Shakawe, area is expected to apply for a mining licence.