BY PORTIA NKANI
Khoemacau Copper Mines, the owner of the Khoemacau Copper Silver Project, has yet again this week added US$85m equity component to its Project Funding Package, bringing total available funding to US$650m (P6.88billion).
All components of the package are said to have closed simultaneously this week Wednesday, and first draws are underway. First copper concentrate production is expected in the first half of 2021.
In February 2019, Khoemacau and Cupric Canyon Capital, which at that time was the sole owner of Khoemacau, announced the signing of a US$565 million project funding package that comprised: a US$275 million senior debt facility from Red Kite Mine Finance (RKMF); and a US$212 million to US$265 million silver stream from RGLD Gold AG (RG AG) a wholly owned subsidiary of Royal Gold, Inc. (Royal Gold), and a US$25 million subordinated debt facility from RG AG.
This funding from RKMF and RG AG, combined with the US$85 million of new equity, provides the Company with total funding of US$650 million.
The funding package will be used for construction of Khoemacau’s 3.6 million tonnes per annum Starter Project, processing ore from a 91 million tonne resource, at a head grade of 2 percent copper and 21g/t silver. First copper concentrate production is expected in the first half of 2021, with annual production averaging 62,000 tonnes of copper and 1.9 million ounces of silver for over 20 years.
The construction cost of the starter project is US$397 million over a two-year construction timeline. The balance of the project funding package covers working capital and corporate general and administrative costs, financing costs during construction, and repayment of the existing US$105m RKMF Bridge Loan. This Bridge Loan has funded all company activities, including exploration, detailed engineering and early construction activities, since late 2016. As well as providing cost overrun support, the project funding package also funds the expansion project studies, engineering and permitting work, and the exploration program for the next 2 years.
On June this year, Khoemacau executed a 5-year, US$560 million, underground mining contract with Barminco, a subsidiary of international mining services group Ausdrill Limited. Following closing of the project funding package, Barminco is now proceeding with mobilization and readiness to commence execution of the Zone 5 underground mine by December this year.
Early construction activities have been underway on the Khoemacau project site since the beginning of 2019. There are now more than 700 people on site carrying out construction work including boxcuts for underground access, roads, a water pipeline and terraces for surface infrastructure. To date some 7.8 percent of the project capital cost has been spent on these activities, while some 57 percent of the capital costs have now been committed.
Earlier this month, President Mokgweetsi Masisi, led the ground breaking and official opening of the Khoemacau project. In his address Masisi noted the significant scale of the project and the associated investment, and that it bore testimony to the country’s attractiveness to foreign direct investment. He further recognized the importance of this project to the local economy and indeed Botswana.
Johan Ferreira, CEO of the company, also added that, “The introduction of RCF brings a further industry leading investor into our financing group, while the increase in the project funding package provides the flexibility necessary to financially de-risk this development and also secures the funding to continue exploration and feasibility work on our exciting expansion options.”
Additionally to his submission, the closing of the package, along with the execution of the underground mining contract with Barminco, allows the Toteng based company to move forward with all project development activities at full pace.