The company's strategists are planning to temporarily suspend operations at Botswana's north-eastern copper mine and thereafter resume production through smaller open-pit operations in order to conserve a limited working capital. Mowana shipped its inaugural export of copper concentrate in October after delays in setting up critical infrastructure.
The global credit crisis has drastically reduced international prices of base metals, including copper, while making it difficult for new miners such as African Copper to secure working capital. Since the beginning of the third quarter, copper prices have fallen from around US$7 000 per tonne to the current average of US$3 000 per tonne. Analysts attribute this fall to reduced demand from China and the general global economic downturn. New miners such as African Copper, meanwhile, have been forced to revise mine development plans and put in place strategies to conserve the little capital they have in hand, already depleted by massive spending during mine development phases.
As at 30 September 2008, African Copper had a working capital deficit of 600,000 British Pounds, forcing its management to look at other sources of cash. According to a new Interim Plan for Mowana made available this week, African Copper is looking at raising up to US$15 million in immediate working capital through debt financing. Officials said discussions were ongoing with a number of finance providers, "but there is no certainty that any of these discussions will result in the raising of the required additional funds".
