Gvt weighs Khoemacau 15% stake option

Johonnes Tsimako of Khoemocau Copper Mining
Johonnes Tsimako of Khoemocau Copper Mining

Government has engaged an international consulting firm to evaluate if the state should exercise its right to take up a 15 percent stake in budding mining house, Khoemacau Copper Mining.

The mining company, which bought off Boseto Mine from Discovery Metals this year, is building a 50,000 tonnes a year copper mine near Somelo, in the northwest.

Khoemacau regional manager, Johannes Tsimako told BusinessWeek that the government has not yet advised on whether it would take up the stake as it was still awaiting recommendation from the consultancy firm.

“Government has engaged AFI Corporate Advisors to do due diligence of the deal and we expect it to take up to two months. The 15 percent stake option is only confined to the Zone 5 mining project near Somelo, which has six prospecting licences. 

“The total investment since we started exploration in 2007 to the time we begin production could be anywhere between $160 million and $200 million.  So government would have to pay 15 percent of that amount if they do decide to buy. But AFI may come up with their own valuation on how much the stake could be worth,” he said.

AFI is a South African financial advisory firm focussing on project finance, mergers and acquisitions, capital raising and corporate restructuring.

In Botswana, the firm has previously been involved in capital raising programmes for BVI and Bokamoso Private Hospital and was also involved in the restructuring of Orange Botswana.

According to the Mines Act, once a mining licence has been issued the government has the option of acquiring up to 15 percent working interest participation in the proposed mine, including the right to appoint up to two directors.

If the option is exercised, then government pays for its shareholding by contributing its working interest percentage of all audited expenditure incurred by the company.

If the government chooses not to exercise the option at the mine development phase, the option lapses. Khoemacau, which is owed by Barclays-backed Cupric Canyon also owns exploration licences at the Banana Zone project in Gantsi.

Addressing the media in Gaborone recently Cupric Africa chief executive officer, Sam Rasmussen said the company will spend $200 million (P2 billion) to bring its new copper and silver mine at Somelo to production.

The construction of the mine is set to start in 2016 with the first copper shipment to the markets expected in 2018.

The mine will produce 50,000 tonnes of copper and 1.8 million ounces of silver per annum.

The company is also in negotiations with government over the connection of the northwestern region to the national grid. The region, which hosts the copper-rich Kalahari Copperbelt, is currently not connected to the power grid and government is installing transmission lines to the area.

Editor's Comment
What about employees in private sector?

How can this be achieved when there already is little care about the working conditions of those within the private sector employ?For a long time, private sector employees have been neglected by their employers, not because they cannot do better to care for them, but because they take advantage of government's laxity when it comes to protecting and advocating for public sector employees, giving the cue to employers within the private sector...

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