New investor raises funds to restart Mowana mine
Staff Writer | Friday January 20, 2017 14:39
The London Stock Exchange-listed Alecto, which is in the process of buying the mine for £6.7 million (P87 million) through a reverse takeover of Cradle investments, raised the funds through the issue of convertible loan notes.
“The net funds raised from the issue of the notes will be used to provide a loan of up to US$1m to Cradle, which it will use to recommence operations at Mowana. Fujax Minerals and Energy Limited, the South African minerals and energy trading company providing off-take financing to Mowana, will match Alecto’s loan to Cradle, thereby providing Mowana with funding of up to, in aggregate, US$2m (P22 million) in the short-term with the aim of bringing the mine back into production in first quarter 2017,” Alecto said.
The balance of the funds raised will be used for general working capital purposes, including the transaction expenses relating to the company’s proposed acquisition of Cradle through a reverse takeover process.
Upon completion of the takeover deal, Alecto will become a 60% shareholder in the mine with the remainder held by former majority shareholder, ZCI Holdings.
“We are delighted that the investment potential of Mowana is recognised and that we have been able to secure these funds to support Alecto’s transition from developer to producer. It is extremely exciting that our loan of US$1m to Cradle will then be matched by Fujax, thereby meeting our US$2m budget to recommence operations at Mowana. The injection of these funds means that we can continue to progress the reverse takeover process and securing of shareholder approval for the Mowana transaction, whilst at the same time commencing production of saleable copper from the mine, allowing Alecto to benefit from its management contract at the mine,” Alecto’s CEO, Mark Jones said.
Despite the interruption of the festive season, Jones said they have made ‘good’ progress at Mowana with work completed to-date comprising the clean-up and recommissioning of equipment, detailed mine planning and design and the recruitment of new personnel.
At the time it was closed, Mowana Mine had failed to pay its creditors leading to one of the company’s mining contractors, Diesel Power applying for the mine’s liquidation over a P47 million debt.
The buying of the mine will come as a boost to the economy as there is currently no operating copper mine in Botswana following the placements of the BCL Group under provisional liquidation last year.
Alecto Minerals plc is an African focused, gold exploration and development company quoted on AIM. It has projects in Zambia, Mali and Burkina Faso.