Discovery Metals Limited (DML), the mining company, said it has instructed its Engineering Procurement and Construction (EPC) contractors Sedgman Limited to begin construction at Boseto copper project.
Brad Sampson, the Managing Director DML, stated the move is meant to keep the company’s development schedule.
“With Sedgman, we have negotiated a well priced contract for a robust design with a proven capable EPC provider,” said Sampson.
“We have chosen to issue the notice now to maintain the company’s development schedule for initial production Q1 2012. In doing so we believe that the Boseto Project will receive the approval from the Botswana government and the project funding to allow the advancement of the Sedgman fixed price EPC contract,” he added.
He explained that initially, Sedgman will be continuing with the detailed engineering and the placement of the long lead time orders.
Segman’s assignment for Boseto Copper Project that is 80 km from Maun includes Front End Engineering Design (FEED) and related metallurgical testing for the copper flotation plant.
Subject to DML’s approval, the scope of works will then be expanded to include detailed design, procurement and construction of the plant and associated infrastructure, including the borefield development. The total estimated value of all works is approximately USD$85 million.
The conventional copper flotation plant is being designed with a rated throughput of up to 3 million tonnes per annum to accommodate the planned project expansion from open cut to underground operations.
Construction is scheduled to commence later this year and be completed by late 2011.
DML’s notice to Segman follows high on the heels of the announcement of the results from the Boseto Project’s Bankable Feasibility Study (BFS) and the Boseto Development Plan (BDP) on 31 August 2010.
The BFS examined the open pit mining of proved and probable ore reserves only for an initial 5 year period, with power provided by diesel generation.
However, it demonstrated economic potential for operations to continue beyond 15 years.
On the other hand, the Boseto Development Plan (BDP) examined the continuation of mining beyond the BFS period, with mining of reserves plus inferred mineral resources via open pit methods and inclusion of the Zeta underground mine. The BDP covers a 15 year period and establishment of a coal fired power station to provide power.
With the positive outcome, the board of Discovery Metals has instructed management to proceed to bank the Boseto copper project and commence placement of long lead items and limited early works.
Sampson said the final Botswana government approvals, licenses, debt and equity funding of the Boseto Project will proceed concurrently with the work throughout the next quarter.
At the end of August 2010, Discovery Metals held in excess of US$33 million in cash, which will enable the company to commence this work from its cash reserve.
Once commissioned, the project will be the first Botswana mine in the Kalahari Copper Belt.