Citizen group takes over Mupane Gold Mine

Changing hands: Mupane mine’s sale is underway
Changing hands: Mupane mine’s sale is underway

FRANCISTOWN: Mupane Gold Mine is set to be sold to a majority citizen-owned company, after its owner, Galane Gold reached a takeover deal with some of the mine’s top managers.

This week, the Canadian company announced plans to sell the mine to Hawks Mining Company Proprietary Limited “at a nominal fee”.

Hawks is a citizen-controlled company run by individuals who form part of Mupane’s top management team. The current Mupane general manager, Cedric Sam is understood to be leading the buyers.

Copyright and Intellectual Property Authority records indicate that Hawks was formed in October last year and is controlled by Sam, mining manager Tobedzani Kuriwa and processing manager Julius Rampart, all citizens who control 77% of shares. The other shareholder is Bradshaw Zinyema, a Zimbabwean national who is the commercial manager.


In a statement this week Galane directors said the group believed that its resources would be better utilised in increasing production at Galaxy Mine in South Africa and restarting operations at the Summit Mine in New Mexico, United States.

This is because the ore body at Mupane’s Tau pit is nearing completion and the mine will soon transition to mining at Golden Eagle pit meaning that it will have to undergo restructuring operationally and financially in order to function effectively as a small operation.

“Mupane has been the cornerstone of Galane since we commenced operations in 2011, and the decision to sell it to the local management team represents a sensible conclusion for both parties,” Galane Gold CEO, Nick Brodie told investors on Monday.

“Mupane needs to transition into a smaller producer, restructuring its operations and finances to match its projected cash flows.

“We believe that the local management team has the skills required and will have the support of the Botswana government to achieve this.

“For Galane Gold, the restructured Mupane does not fit our long-term goals.”

While no financial terms for the takeover have been revealed, Galane Gold was trading at 13 Canadian cents (P1.20) on the Toronto Stock Exchange on Wednesday. The deal is a 'take all' affair with the new owners not only taking over the assets and rights Galane had, but also inheriting the gold producer’s liabilities.

The liabilities include an amount of about five million Canadian dollars (P45.5 million) owed to government in deferred royalties as well as other obligations such as the rehabilitation commitment required by law. Galane Gold also owed loans to several creditors and was due to earn interest for loans made to other debtors.

Running the mine will not be a walk in the park for the new owners. The mine has changed ownership several times over the last two decades as its profitability and ore body continued to decline. Mupane started production in 2004, with Galane taking over from IAM Corporation in 2011.

In the nine months to September 2021, Mupane produced 17,281 ounces of gold, compared to 27,369 ounces over the same period in 2020. Revenue earned over that period in 2021 amounted to $31.7 million (P366.1m), down from $38.4 million (P444m) in the prior year.

Yesterday, Botswana Mine Workers Union (BMWU) executive secretary Kitso Phiri told BusinessWeek that the union leadership was aware of the intended disposal of Mupane assets by Galane Gold to Hawks Mining Company.

He explained that while the intention of the sale feeds into the broader national priorities of citizen participation in the minerals sector, decent work should be at the heart of the transaction.

“It was imperative for the mine owners to consult the union, given the impact this transaction is going to have on the employees’ job security,” he said.

“It's common cause that the company is restructuring its finances and operations and an endeavour of that nature has serious ramifications on employees’ livelihoods.”

Phiri added: “We have requested an urgent meeting with Mupane Management to appraise us on the developments and thereafter we can seek appropriate interventions for our members.

“It is during these transactions that employee ownership schemes should be considered given the nature of the commodity mined at Mupane, to assess the legacy issues associated with the commodity and measures put in place to address them.”

The deal between Galane Gold and its managers is expected to be finalised by the end of March, depending on several regulatory assessments.

Editor's Comment
A step in the right direction

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