from ..SP Angel27 Nov 2018 13:26
Cradle Arc has confirmed the conditional agreement of a US$4m working capital facility to its 60% owned subsidiary, Leboam Holdings which operates the Mowana copper mine in Botswana.
The previously announced loan from Fujax Minerals and Energy, which has an offtake agreement for production at Mowana, attracts interest at 13.5% pa over a 24 month period with a six months payment holiday starting from April 2019.
Fujax also acquires the right to an additional 80,000t of concentrate offtake for each $1m drawn down on the loan to a maximum of 320,000t as well as a 3.75% net-smelter-royalty
The company takes the opportunity to provide an operating update where production of 140t of contained copper during October fell short of the management original forecast of 392t. where continuing intermittent breakdowns and the impact of water shortages resulting from severe drought conditions.
Despite the underperformance in October, the company points to a number of encouraging developments including its expectation of, "stable production … for the remainder of the quarter". As well as the news that with a planned re-lining of the mill in late November expected to deliver nameplate capacity of 155tph "Mill availability is improving and the final concentrate grade achieved throughout Q4 to date has been above forecast levels".
Mining operations are focussed on waste removal "in order to increase space in the open pit"
CEO, Kevin van Wouw, commented that "he implementation of the previously announced key improvement and rehabilitation works at the processing plant has now largely been completed, with the main outstanding items being a full reline of the mill and continued rehabilitation of the water supply boreholes from the wellfield 7km from the mine. Accordingly, with the ores available for processing and operations at Mowana on a more stable footing, we expect steady improvement in performance of the project over the coming months."
Mr. van Wouw also recognised the support of Fujax as a "vote of confidence in the Mowana operations" and pointed out that "Fujax has partnered and supported Cradle since the acquisition of Mowana as both funder to and off-taker of mine concentrate and is intimate with the mine operations and the opportunity the mine brings to the company and its shareholders."
Conclusion: The working capital facility should provide Mowana with the financial capacity to address the operational difficulties at Mowana. The company points to signs of operational improvements and optimism that the worst may be behind it as it moves towards minimising operational disruptions and establishing stable plant performance
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