African copper’s Mowana Mine is due to start operations soon. The Mine’s General Manager, James Arthur, said on the company website that the plant should be handed over to the company by the end of October, adding that the engineering, procurement, construction and management (“EPCM”) contractor is currently undertaking the completion guarantees related to the final commissioning of the processing plant. Indications are that stable operating conditions have now been reached and steady state daily production of copper concentrates has been achieved. The whole process from the construction to the commissioning of the plant took 24 months.
Copper concentrate deliveries have commenced on October 22 from a current discharge stockpile of around 800 tonnes. Continuing mechanical problems with bearings and lubrication systems delayed the final commissioning of the plant by the EPCM contractor and prevented timely attainment of stable conditions and the ability to stress test the downstream float and tailings design. Shipments are expected to accelerate as the processing facility reaches full production. Currently, the plant is processing approximately 2,000 tonnes of ore per day and is expected to reach its full capacity during November 2008.
Because of delays in shipping the first concentrate, African Copper has revised its 2008 production forecast of approximately 5,000 tonnes of copper in concentrate and now expects to produce around 2,300 tonnes of copper in concentrate during 2008.The Company has put options covering 1,950 tonnes of copper at a strike price of US$3.00/lb divided evenly over the period October 2008 to December 2008. MRI Trading Ag is the purchaser of all copper concentrate from the Mowana Mine under the terms of a five year off-take agreement.
The delays in shipping first copper concentrate have impacted on the Company’s working capital position. The Company expects to begin receiving the proceeds of sale of copper concentrate in November 2008. In order to address its immediate working capital requirements the Company is currently seeking to raise up to $US 15 million to fund its ongoing needs. Accordingly, detailed discussions are being held with a number of potential debt and equity capital providers.
In 2009, management will focus on optimizing current operations through aggressive reduction of operating costs and adjusting mining rates with a view to maximizing operating margins. Mining of the Mowana deposit to date has been successful. Just under one million tonnes of material has been mined and stockpiled to date with over 300,000 tonnes grading 1.7 % copper. This represents around twelve months’ throughput for the plant, based on the mill and plant capacity. As a result the Company is holding surplus stockpile for its immediate requirements and management has, therefore, decided to reduce its mining rate until the balance between the size of the stockpile and the processing rate is optimized. This will reduce the stockpile gradually until it can be maintained at 150,000 tonnes representing approximately two months of production.
Due to current market conditions management has decided to conserve capital and is therefore postponing the finalization of the expansion plan. This plan contemplated among other things, capital expenditure commitments for the implementation of a Dense Media Separation (“DMS”) plant, which will be deferred until market conditions improve. (www.africancopper.com)
