Wednesday, July 6, 2022

African Copper issues P150 million bond to build township

The tri-listed copper miner, African Copper Plc, intends to issue P 200 million bond aimed at raising cash, part of which will be used to turn Dukwi and Mosetse villagesÔÇönear its Mowana mine ÔÇö into a township.

The company, which is due to commission its first mine ever at the end of April this year, has already made an application to the Botswana Stock Exchange ( BSE) with the view of listing the bond at a later date.

Joe Hamilton, Chief Executive Officer of African Copper, told The Sunday Standard on Friday from Canada that the ‘deal on the issuance of the bond will be closed on Monday” and the money will be used for the development of the Mowana mine and general working capital.

The bond will carry a coupon rate of 14 percent and matures in seven years.
“We are very excited by the response of Botswana investors and their enthusiasm about the development of the mine. The issue reflects the growth and strength of the financial sector in Botswana,” he said.

“We are commissioning the processing plant now. Mining commenced late last year. We expect first production of copper sometime in the second quarter of this year (May or June). We would look to declare commercial production and ship copper-in-concentrate starting sometime in the third quarter (July, August or September).

“The initial mine life is 7 years from the open pit. A great deal of the copper resources lie beneath the open pit but would require an underground mine for extraction. We are studying the feasibility of an underground mine now but construction would take at least two years,” he told Sunday Standard from his office in Canada.

Financial analysts were upbeat on Friday that the application would go through given the facts of the case and added that it shows that the life-span of its operations in the country would go beyond the originally thought period of 17 years.

“They were initially looking to raise P 200 million but the details of the proposal are still kept in wraps until the BSE approves it.

“I am confident that the application would go through. It is not a technical matter and that is why it has been referred to the executive committee of the BSE rather than the listing committee,” one analyst said.

African Copper is currently putting up some 50 unit houses in Mosetse and Dukwi which are replete with electricity, running water, street lights and tarred streets and sewage system from its pocket.

This is a big transformation to the two villages which, put together, have a population of probably less than 20,000 and most of them are unemployed.
During the ground-breaking ceremony of the housing projects late last year, the company indicated that it intended to burn some money to uplift the villages’ infrastructure as it intended to apply for more land where it could house its employees. After the commissioning of the mine, it intends to have a staff compliment of at least 700 people.
“I think this is an indication that it has more resources than was originally thought. And again, you look at the fact that they are still prospecting at Thakadu and Makala – places which are adjacent to Mowana Mine,” an analyst added.

The decision to take a plunge into its finds is partly driven by copper’s strong demand from the Asian countries, mainly China, which is trying to re-build its economy in order to be internationally competitive.

Last year, Hamilton told The Sunday Standard that he expected the strong demand to remain strong for at least the next three years.

The tall and grey-haired Hamilton whose company is eyeing to commission the mine during the current quarter said that they “expect the copper price to remain strong over the next three years”.

“The global demand for copper remains high and stockpiles of both finished copper concentrate remains tight. We expect the copper price to remain strong over the next three years,” he said.
The copper price sprang to record high following the intense industrialization of China and India- the two countries which are hungry for the red metal to connect telephone networks and for other industrial purposes.

The tri-listed African Copper on Botswana, London and Toronto stock exchanges has said the Mowana mine will have a life-span of 17 years and it is busy prospecting on other sites.
Last month the company said it has reviewed its operating parameter with the view to optimize the production profile of the mine within the first five years of open pit mining.

“The new production schedule has the potential to generate higher production, lower costs and defer additional capital requirements for two years,” the company said.

The company was granted a mining licence over an area of 10 kilometers at Dukwi ÔÇô which is some 100 kilometers west of Francistown.

African copper also has about 4000 km2 of prospecting area covering Makala, Matsitama and Nakalakwana, which has been described as the target area.


Read this week's paper