In its quarterly report released on Friday, Discovery said that it had Aus$16.9 million (P137 million) in cash, down nearly two-thirds from the amount available in December.However, Cathay Fortune yesterday raised concerns about the rapid cash burn and negative cash flow from operations and said it saw no sign of improvement in the near future due to a sharply lower-than-expected grade of ore at the Boseto Mine."In view of the continuous disappointing operation results which never achieve what the management has planned, we cannot foresee any possibility of improvement of such sustained cash flow disequilibrium under the gloomy commodity market situation," Cathay said in a statement emailed to Reuters.
Cathay is a private equity firm founded by Chinese billionaire Yu Yong. Working with the China-Africa Development Fund, it cancelled an Aus$849 million (P6.5 billion) bid for Discovery Metals in February over concerns about the target's key copper project in Botswana. But it remains Discovery's top shareholder, with a 13.7 percent stake, according to Thomson Reuters data.Discovery Metals went on a trading halt on Friday pending an announcement on a financing plan. Cathay said the plan would hurt existing shareholders. The Boseto Mine, which was commissioned last year, currently produces 36,000 tonnes of copper and 1.1 million ounces of silver in concentrate per year. But plans are underway to ramp up production to 50,000 tonnes per year through an expansion of plant capacity by 66 percent from three million tonnes per annum (mtpa) to 5mtpa by 2015, based on the expanded mineral resources. In a statement to the Botswana Stock Exchange (BSE), the Australian based miner announced that it is finalising plans for debt market issuance to raise between P1.6 ($200 million) and P2 billion ($250 million).
