Sunday, May 22, 2022

Boseto mine expected to cut more jobs

Discovery Metals Limited (DML) has confirmed that its open-pit copper mining and processing operations at the Boseto Copper Operation in Botswana will go for “care and maintenance” within the next six months.

In a telephonic interview with Sunday Standard on Wednesday, DML Country Manager Mokwena Morulane said that the company’s recent review has been undertaken having regard to both the current and continuing soft market outlook for copper on world commodity markets, where copper prices have deteriorated by approximately $US 1,000 per tonne during calendar year 2014 to their current four year lows. Morulane added that the other current challenge is the high stripping ratio or restricted geometric nature of the Boseto open pits.

“Following the completion of this review, the company announces its decision to place the Boseto Copper Operation on “care and maintenance” within the next six months,” he said.
Morulane revealed that the process will entail the cessation of the current open-pit mining and processing operations by the middle of 2015.

Beginning of December 2014, the company advised that due to projected cash flow shortfalls in December 2014 it will need to draw a further $US2 million in funding, for a total of $US5 million in funding under the Interim Funding Agreement with Cupric, prior to 31 December, 2014.

Morulane added that the review has determined that the current high strip ratio open pits result in a high cost operating environment which is not sufficiently cash-flow positive in light of the prevailing copper price. He stated that the review concluded that the current outlook for copper pricing on world commodity markets is expected to remain soft in the short to medium term and hence a recovery in the profitability of the Boseto open pit operations is unlikely in the near future.

“We are not making money, we are losing money and we cannot keep going on with this rate. We are considering winding down our operations as we currently have 422 direct employees and we are considering reducing number of employees next year,” said Morulane.

He is of the view that the financial modelling supporting the recently completed review indicates that at the end of this period, sufficient revenues and cash funding is expected to have been generated to repay all short term lending, to fund all creditor and employee obligations, and to sustain the operations on a “care and maintenance” basis, while alternative options are able to be assessed for the Boseto Copper Operation.

He further stated that the company will immediately move the current focus of the Boseto Copper operation to a “completion of current pits” style operation, the objectives of which are to maximize the extraction of ore from the current operating pits, with no new, or additional, open pits to be commenced. He added that it is also to maximise all available revenues from current open pits and minimise all waste stripping and waste movement operations to reduce costs and cash outlays.

He revealed that the company expects to provide an update on the current exclusive discussions with Cupric during the second half of January 2015.

“Should the proposed transaction with Cupric as announced on 2nd December 2014 not proceed, then the company will be pursuing opportunities with alternative interested parties to support the company’s move to recapitalise or refinance the operation and the move to underground mining operations,” he stated.

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