Alecto Minerals, listed on AIM, has announced the proposed acquisition of Cradle Arc Investments, a company incorporated in Botswana, which owns the Mowana copper mine in north-eastern Botswana. In terms of the transaction, Alecto will acquire a 60 % interest in Mowana, whose infrastructure include a processing plant which can be brought back into production at a relatively low cost.
An offtake financing agreement has been agreed by Cradle for US$20 million which will provide funding for investment in the mine and the plant in order to increase recoveries.
Mowana has a mineral resource inventory of 683 000 tonnes copper (Cu) in the measured and indicated categories (JORC-code compliant) with an additional 945 000 tonnes Cu in the inferred category.
The mine was commissioned in 2008 at a cost of US$60 million. It operated successfully as an open-pit operation between 2008 and 2015 processing an average of 775 406 t/a of ore at an average grade of 1,72 % copper. In FY2013/14 Mowana produced 43 301 tonnes of concentrate, representing 9 724 tonnes of Cu.
Alecto and its partners in the proposed transaction have re-modelled the mine to ensure that it can produce from a much lower cost base to generate profit even at depressed commodity prices. At a copper price of US$2,50 per lb, Alecto’s internal estimate for the project’s NPV is US$245 million
Alecto intends to perform process route upgrades including the installation of a Dense Media Separation (DMS) plant to increase throughput from 1,2 Mt/a to 2,6 Mt/a to achieve an average copper production of 22 000 tonnes saleable Cu per annum
The process route upgrades, which are expected to cost US$20 million, will be funded through an agreement with Fujax Minerals and Energy Limited and Northern Heavy Industries Group Company Limited.
Alecto has agreed a 10-year management contract for Mowana with its partners and will receive management fees equal to 1,5 % of revenue.
Mark Jones, CEO of Alecto Minerals, commented: “Mowana is a first class copper mining project and I am very excited about the prospect of bringing it into Alecto’s portfolio. The proposed acquisition of Mowana will be transformational for Alecto, turning the Group into a producing miner and materially strengthening its balance sheet.
“I very much look forward to effectively completing our transformation from a greenfield exploration company into a multi-commodity metals producer in Africa in the coming months, and the team has conducted significant work to ensure that this is achievable. Our technical team has worked tirelessly to generate a robust business model that will target early cash flow from both the profitable mining of copper and the management of the operation.
“Additionally, our commercial team has secured commitments for funding, so that we can realise the maximum value from copper production and quickly initiate plant improvements at Mowana that are expected to deliver substantial production efficiencies.”
The Mowana plant uses standard flotation process technology and has been designed to produce saleable copper concentrates from the treatment of oxide, supergene and sulphide ores.
Alecto currently has gold projects in Zambia (where it owns the historic Matala and Dunrobin gold mines), Mali and Burkina Faso.