A Chinese tycoon whose firm took control of the Letlhakane Uranium project near Serule earlier this year, has extended an Australian $500,000 (P4 million) loan, as the venture battles to keep running despite the coronavirus (COVID-19) crisis.
Earlier this year, He Jiandong, a Chinese engineering tycoon, successfully mounted a $5 million bid for control of A-Cap Resources, the firm developing the Letlhakane Uranium Mine near Serule, which is ranked in the world’s top 10 undeveloped uranium projects. A-Cap directors said the offer was unfair but reasonable, with shareholders voting in favour of the takeover late February.
A statement from the company this week shows that A-Cap retrenched some of its local staff and cut directors’ fees as well as any payments for services associated with directors, as a way of keeping afloat during the pandemic.
“In December 2019, due to the current low price of uranium, regrettably A-Cap retrenched some staff at its Botswana operations,” the company stated.
“Staff remaining will provide administration and technical continuity for the project whilst waiting for market conditions to improve.
“The remaining team will keep the mining licence conditions in compliance and complete low-level desktop studies to further the project.
“The Commissioner of Labour and the Department of Mines were duly informed of the retrenchments.”
Over the years as the project has moved closer to production, Chinese firms and magnates have moved to hold significant interests in A-Cap. Prior to the COVID-19 outbreak, China’s demand for uranium was expected to double later this year, an appetite that has sent developers in that country scurrying
Jiandong’s own entry into A-Cap’s share registry was via the takeover of Jiangsu Shengen Resources’ 41% stake in the uranium company.
However, those who have jumped on board A-Cap have often been forced to dig deep into their own pockets to keep the company running, as various factors have conspired to keep the project from reaching commercial production.
A-Cap was awarded a 22-year mining licence in 2016, but deferred production citing weak commodity prices. Production is now expected in 2022 from a resource estimated at 367 million pounds.
“While the nuclear industry is confident in the long-term fundamentals of uranium and nuclear power, there is less certainty in the short term with industry expectation that the market will gradually move towards balance from calendar year 2025,” A-Cap officials said in their market update this week.
Under the takeover deal, Jiandong and another Chinese engineering player, Meng Weijun, joined the A-Cap board, replacing previous chair, Angang Shen and another director, Chenghu Zhu.
Shen’s Ansheng Investment Co bought into A-Cap in 2013 and held a 19.8% stake. Shen had previously lent A-Cap funding for its working capital. As part of his takeover, Jiandong had offered to clear A-Cap’s loan with the Industrial and Commercial Bank of China or alternatively release Jiangsu from the same obligation.