Cash-strapped copper producer, African Copper has secured another $2 million (P20 million) loan facility from parent company ZCIâ€™s controlling party, the Copperbelt Development Foundation.
This brings the Botswana subsidiary’s interest-bearing loans with ZCI to $102,3 million (P1,2 billion).
The new loan facility, which would provide the subsidiary with short-term working capital, followed on a $1.5-million unsecured and a $4.5-million secured loan facility in May and February respectively as the company sought out long-term funding.
“The CDF Loan Facility has an interest rate of nine per cent per annum with the principal and accrued interest repayable in full on March 31, 2016.
“Shareholders are further advised that ZCI and ACU are still currently running processes to secure additional long term funding.
“Accordingly, shareholders are advised to continue exercising caution when dealing in the Company’s securities until further announcement,” the London Stock exchange listed ZCI said in a statement.
African Copper, which plans to delist from the Botswana Stock Exchange, closed one of its two mines, Thakadu Mine, in May this year.
The company has also said it would significantly cut production at its flagship mine, Mowana open pit.
African Copper said low ore grades coupled with high operational costs necessitated the early termination of the mine.
“The Thakadu mine is nearing the end of its scheduled lifespan and in order to confirm future grades, it would be necessary to conduct medium depth high resolution drilling.
“However, due to the short remaining mine life, a smaller mining footprint and the cost associated with such a drilling programme, the company has taken the decision to stop mining at the Thakadu pit by the end of May 2015.
“This plan also envisages mining Mowana ore at a significantly reduced rate, producing copper to cover operating costs while conserving cash through tight cost control,” African Copper said.
Early this year, African Copper warned it might not be able to continue operating Mowana and Thakadu mine if copper prices do not improve. Copper prices have not been stable since 2008. In a statement released in February, the company alerted that should it not secure additional funds, and if current market conditions prevail, it may not then be able to continue as a going concern. The company added that it was conducting a review of its operations to consider various short-term and long-term strategies to meet the group’s current and future funding requirements.
This will be done in light of the existing market conditions and, more specifically, the recent fall in the copper prices. Due to weak demand, copper prices are at their lowest since 2008 after dropping by $1,000 per tonne, or 15 percent in 2014 alone.
African Copper’s latest financial results show that the BSE listed company recorded a loss of $8.8 million (P83 million) for the six-month period ended September 30, 2014, compared with a loss of $29.1 million for the corresponding period in 2013.