The management of Discovery Metals, the Botswana Stock Exchange (BSE)-listed copper miner, told its annual general meeting that it will continue to resist advances from its Chinese suitor unless it tables a better takeover proposal.
The company’s Managing Director, Brad Sampson, re-affirmed the decision to reject a recent, conditional and opportunistic takeover offer from Chinese group, Cathay Fortune Investment Ltd (CFC).
CFC had made an unsolicited offer of $1.70 per share for Discovery Metals, which directors have declared to be inadequate.
“The proposed offer does not reflect the full value of the Company and its future potential,” said Sampson.
“The successful commissioning of Boseto has significantly de-risked the operations of the Company. We have firm plans for production expansions, reductions in costs, and major exploration potential in our portfolio. We have a well-established track record of delivery and we are now on the verge of delivering the benefits of our hard work over the past seven years,” he added.
In a bid to convince shareholders, the management updated shareholders their company was on track to deliver further strong growth in 2013. After achieving a major milestone in 2012 with the commissioning of its flagship Boseto copper project in Botswana, shareholders were told at the Company’s Annual General Meeting.
Sampson said after seven years of careful planning and development, Discovery Metals became the first copper producer in the highly prospective Kalahari Copperbelt with the start of commissioning at Boseto in June, on time and on budget.
The operation, which had a total capital cost of approximately $340 million (including exploration, feasibility study, and plant construction), is designed to produce approximately 36,000 tonnes of copper and 1.1 million ounces of silver in concentrate per year.
Mining in the Zeta open pit at Boseto has been ramping up over recent months to supply the concentrator with its design throughput capacity of 3Mtpa. With the sale of concentrate increasing progressively, the Company achieved positive cashflow for the first time in September.
During the year, a Definitive Feasibility Study was also completed for the construction of the Zeta underground mine, with decline development due to start in December 2013, and providing average annual ore production of 1.5 Mt. This will maintain the ore supply to the concentrator at the 3Mtpa rate as the Zeta open pit is wound down, and as other pits are developed.
Simultaneously, the Company was achieving major success with its exploration program, which has added 96 million tonnes to Mineral Resources during the 2012 calendar year so far, almost doubling the Mineral Resources to a total of approximately 207.2 Mt at 1.3 percent Cu and 16 g/t Ag. (Full Ore Reserves and Mineral Resources are outlined at the end of this release.)
Mineral Resources were added at a number of new discoveries within the Boseto zone radius of approximately 30 km, potentially extending the life of the operation and enabling further expansions of processing capacity.
The company added that plans are already well advanced to lift annual copper production to 50,000 tonnes per year through an expansion of plant capacity by 66 percent from 3Mtpa to 5Mtpa by 2015, based on the expanded Mineral Resources. Front end engineering design has recently commenced and the company anticipates approval to commence construction in the first half of the 2013 calendar year.
The company also is driving forward with plans to cut costs through the construction of a coal-fired power station to replace the existing diesel power plant at Boseto, and to be supplied from the extensive coal resources of eastern Botswana.
Exploration continues to be a priority for the Company in the current financial year, with drilling planned to extend existing mineralised zones and identify new stand-alone deposits elsewhere in the Kalahari Copperbelt, where Discovery holds approximately 1000 km of prospective and unexplored territory.
“Now is not the time for shareholders to hand over potentially significant future returns to an opportunistic bidder,” he said.
