Mowana Mine swings to full production
Staff Writer | Wednesday May 17, 2017 07:20
The mine, which was closed in December 2015, only reopened two months ago with trial production.
In a statement, the company said over 1,900 tonnes of copper concentrate have been produced to date, which is being sold to Alecto’s offtake partner, Fujax Minerals and Energy Limited.
“Mowana is now a full-time copper production operation and we look forward to gaining ownership of the project subject to shareholder approval at which point, we believe, our company will benefit from a significant value re-rating.
Once effected, we will have taken control of a significant asset, which has been subject to more than $150 million of investment in the past for an acquisition price of approximately $10 million,” chief executive officer of Alecto, Mark Jones said.
Alecto is in the process of acquiring the project by way of a reverse takeover.
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.
A Competent Persons Report (CPR) on Mowana estimates a current resource of 172 million tonnes of copper of which 26 million tonnes sit within two existing pre-stripped 350 metre-deep pits. These pits represent the main areas of current operation.
“We are delighted that the CPR demonstrates the compelling economics of our project. Even better is that it starts to show the tremendous potential upside available using modern techniques identified by our experienced industry partners.
As shareholders can see there is a hive of activity on site, and having already delivered on our stated operation objective,” Jones added.
Production costs are expected to average $1.5 per pound with the mine estimated to have a value of $87.5 million for the initial 12,000 tonnes.
Alecto and its partners say they have re-modelled Mowana Mine to ensure profitable operations even at depressed commodity prices, leading to an internal estimate for the project’s net present value of $245 million at a copper price of $2.50 per pound.
Alecto has also agreed a 10-year management contract for Mowana with its partners and will receive management fees equal to 1.5% of revenue.
The resurgence of the mine has come as a boost to the economy as there is currently no operating copper mine in Botswana following the placement of the BCL Group under provisional liquidation last year.
Alecto Minerals plc is an African focused, gold exploration and development company quoted on AIM, with projects in Zambia, Mali and Burkina Faso.