Creditors of Discovery Copper Botswana have accepted a $34.5 m (P343million) bid for the company, paving way for Boseto Mine to come out of provisional liquidation.
Pursuant to an application made by Standard Chartered Bank, Discovery Metals was early this year placed under provisional liquidation after failing to meet its financial obligations amounting to over $137 million (P1.3 billion), to various creditors.
In a meeting held in Gaborone last Friday, creditors unanimously agreed to accept an offer from Barclays backed -Cupric Canyon to take over the mine. Provisional liquidators of the mine, Deloitte, are now expected to take the matter to the High Court next week for sanctioning.
Director of tax services at Deloitte, Terry Brick told BusinessWeek that after the court’s endorsement, Discovery will come out of liquidation and Cupric will takeover the mine.
“Eighty seven percent of the creditors present at the meeting voted in favour of the takeover representing 92 percent of the amount owed by Discovery. We will now approach the High court next week.
“The Court would want to satisfy itself that the right procedures were followed and that the Cupric has the capacity to take Discovery out of insolvency,” he said. From the $137 million total liabilities, $103 million is owed to secured lenders, $4 million to government and $30 million to unsecured creditors.
The creditors syndicate comprise of Standard Chartered Bank, Credit Swiss, Caterpillar Finance and Cupric Canyon, which is taking over.
According to Brick, government will receive 100 percent of the amount owed, while secured lenders will get 22 percent of the $103 million while unsecured creditors will receive 20 percent of the $30 million owed.
Cupric Canyon, through a local subsidiary Khoemacaue, is also expected to open another copper mine in the same area as Boseto next year.
Khoemacaue has been granted a mining licence by government and plans to mine 3.6 million tonnes of ore per annum to produce 50,000 tonnes of copper concentrate. Speaking at a mining conference in Gaborone recently, Khoemacaue Copper Mining regional manager Johannes Tsimako said the company was awarded a mining licence in March this year and plans are underway to begin construction of the underground mine early 2016.
“Our plan is to develop a greater part of the Kalahari copper belt region in the north- west part of the country.
“Apart from the new mine, we have also tabled an offer to buy Discovery Metals’ Boseto Copper mine in the same region.
“The plan is to utilise Boseto’s processing infrastructure for the new mine,” he said.
Tsimako also said government is looking at taking a 15 percent participating interest in the Khoemacaue Copper Mining.
Under the law, the government is empowered to take up to 15 percent in a base metals mining venture. Barclays Natural Resources owns 97 percent of Cupric Canyon, which in turn has a 100 percent shareholding in Khoemacaue Copper Mining.
Khoemacaue is also exploring for copper in neighbouring district of Ghanzi as it aims to fully develop the Kalahari copper belt.
As part of efforts to secure power for the northwest based miners, government is expected to invite bids for the construction of a 50MW solar power station to supply mines in that area.
During operation DML Mine, which laid off 400 workers when it was closed in March, reportedly spent P26 million monthly to fuel the diesel generators at Boseto to power the mine.