Canadian explorer seals Ghanzi mining takeover

THATO MOSEKI
Correspondent | Friday October 23, 2009 00:00

Before the purchase, Stellent owned the 2,200 square km area, comprising five prospecting licences with a high potential for copper and silver mineralisation. Under a Share Purchase Agreement, Hana Mining was to takeover Stellent through purchase of the latter's entire equity, thus enabling the Canadian company to own the Ghanzi property.

According to an inferred resource estimate released in June, the 2,200 square km property on the Kalahari copperbelt, could contain up to two billion tonnes of copper and 34.9 million ounces of silver.

Hana Mining sealed the 70 percent equity deal in Stellent through a cash payment of US$200 000 (P1.3 million) and other conditions. As part of the deal, Hana Mining issued 166, 666 shares to Stellent and more than half a million share purchase warrants entitling the purchase of shares for a period of two years at a price of 32 Canadian cents (P2) per share. Under the transaction, Hana Mining has appointed three members to the Stellent board, while Stellent shareholders have appointed one director to the Hana Mining board.Hana Mining Chief Executive Officer, Marek Kreczmer revealed that a Share Purchase Agreement with Stellent had provisions for the Canadian explorer to buy the remaining 30 percent equity.

Under the accord, Hana Mining will purchase an additional 20 percent share interest in Stellent for a cash payment of US$9 million (P58.3 million) to be paid on the completion of a positive Bankable Feasibility Study for the project, the sale of all of Hana's issued common shares or at the Canadian company's discretion.

Purchase of the final ten percent share interest will be through the issuance of four million share purchase warrants entitling the purchase of one additional share in Hana for a period of 24 months at a price of two Canadian Dollars (P12).These share purchase warrants will be issued ten days following the announcement of the completion of a positive Bankable Feasibility Study,' said the CEO.

Since the beginning of the year, Hana Mining has intensified its efforts to develop the Ghanzi project into one of Africa's premier copper and silver mining operations. Part of these efforts have been to kickstart processes related to technical studies and assessments, project financing and entry of experienced project management.

The Canadian explorer has segmented its plans for the Ghanzi project into four phases with Phase I (2009-2010) expected to cost US$18 million (P114 million). The first phase will focus on concentrate resource drilling at the Banana Zone to establish indicated and inferred resource, project economics, water access, environmental and social obligations and progress infrastructure issues.Thus far, drilling has also continued throughout the year, with particular focus on the Banana Zone, a section within the prospecting area containing 67 percent of the total inferred resource. The company has already said the Banana Zone could be a stand alone operation and is also reviewing the open-pit potential for the area. For 2009 and 2010, Hana Mining plans to focus on the Banana Zone in terms of drilling efforts and general development.

Further results from the 2009 drilling campaign will be used to update the resource estimate in the first quarter of next year.

In terms of finances, earlier this month, Hana Mining closed a 150,000 Canadian Dollar (P916 000) private placement of shares, with the funds being directed to the ongoing exploration of the Ghanzi project and general working capital purposes. Also in 2009, Hana completed two placements worth 3.2 million Canadian Dollar (P19.4 million) and 500,000 Canadian Dollars (P3 million), all contributing towards Phase One costs.

The Canadian company is also hoping to complete a water study and begin a metallurgical study focused on recoveries, milling, smelting and refining behaviours this year.

Phase II of developing the Ghanzi project is set to commence in 2011 and involve the completion of resource drilling at the Banana Zone and advancing the resource from measured to indicated. Phase II will also confirm project economics with a Pre-Feasibility Study based on the measured to indicated resource.

Between 2012 and 2013, Hana will embark on Phase III which will include a Bankable Feasibility Study, non-recourse financing, attainment of mining licences and water rights, establishment of infrastructure and the possible finalisation of the Share Purchase Agreement with Stellent if this has not already been completed.

The last phase in the development of the Ghanzi copper and silver project involves the engagement of an engineering, procurement, construction and management contractor, pre-mine development and mine construction. Commercial and full production is planned to start in 2015, enabling the Canadian explorer to join the adjacent Discovery Metals Limited as Botswana's only copper and silver producers.