Discovery Metal Limited (DML) country manager Mokwena Morulane has confirmed that Cupric Canyon Capital has approached them and expressed interest in acquiring their Boseto operations.
Cupric Canyon Capital LP, which is owned by its management and the Barclays Natural Resource Investments division of Barclays, is focused on acquiring interests in undeveloped copper assets with a known resource and adding value to them by assisting in the advancement of the projects through the stages of development, construction and operations. Speaking in an interview following the interest of sale to Cupric Canyon Capital, Morulane said: “They are just potential owners and the talks are still at a junior stage.” He added that the final decision might be made by end of January 2015.
Morulane could not disclose the exact value of Bosetu until an independent advisor has been engaged to provide the mine’s value. “The fact that the mine is still producing will be taken into consideration,” he said about negotiations for the acquisition. In the first quarter of 2015 DML recorded the best production since project commencement with 6428 tonnes of copper at C1 cash cost of US$1.89/lb. The company has achieved record production commencing with the 2011 tonnes of copper produced in April 2014. The production has improved for the better in both July and August 2014 with 2061 tonnes and 2283 tonnes of copper respectively.
Morulane pointed out that factors such as their Botswana Stock Exchange listing and employees welfare will be dealt with if there is any agreement made with Cupric Canyon Capital. “Currently there is no telling if the sale will go through or not we will only know by January 2015.” Meanwhile the company has entered into a US$5 million short term working capital facility with Cupric, hence giving them a period of exclusivity to allow it to complete due diligence.
The facility gives time to both DML and Cupric to finalise and agree on definitive terms of potential transaction. The exclusivity period extends to January 31 2015 for a legally binding sale. The facility will be used to provide support to DML operations arising from operating cash-flow shortfalls in November 2014 and for working capital. The terms of the facility allow for US$3 million to be made immediately available, US$2 million will be available from January 31 2015. Interest is payable on a monthly basis at LIBOR plus a margin of 10 percent per year.