RE: SP Angel27 Feb 2019 14:26
Cradle Arc Plc* (CRA LN) Suspended – Provisional judicial manager recommends full judicial management in Botswana High Court Sometimes a company with sensible management and a workable plan goes to the wall for all the wrong reasons.
Cradle Arc is a case study in taking on the wrong investor / debt instrument following introductions by Tamesis.
Yesterday the provisional judicial manager for the operating subsidiary, Leboam in Botswana recommended full judicial management in Botswana High Court. A final decision is expected on Thursday.
Fujax a commodity trading company based in Mauritus was reported have reneged on a USR4m funding arrangement causing the company to go into Judicial Review
Cradle Arc management were unable to refinance the business to complete its plan to raise copper recovery rates through the processing of better quality sulphide ores by sorting out the oxide and transitional material.
Tragedy: the tragedy is that having completed remedial action in mid-November last year, Fujax reneged on fulfilling its commitments and Judicial Management started on 18 December.
This put Cradle Arc’s loan notes into default causing the company to enter Administration on 31 Jan 2019.
Sadly the company was in the final stages of negotiation to sell assets in Zambia and Mali for $5m and the company was due to reclaim some £700,000 from HMRC.
The Mowana copper mine still has 5 benches of material available and 3 benches of the North Pit Available at strip ratios of around 2:1.
The material adds up to 1.8mt of resource with 1.2mt of ore expected from this.
Recovery rates should be between 55-85% copper depending on how much transitional material is sorted out.
The Mowana mine has debts of:
$10m Loan note - secured. Noteholder name remains undisclosed
$9.9m ZCI Secured Debt
$10m Liquidator (MCB) debt
$7m Offtake Pre-payment
$2m PenMin Facility.
$6m Creditors.
Cradle Arc the company owes:
£400,000 in trade creditors
£800,000 convertible loan notes – in default. Noteholder name remains undisclosed
£400,000 staff liability
$10m loan notes passed down to Mowana
$18m in shareholder loans down to Mowana including the notes
Management are/were looking to fund $600,000 of work to figure out if they should continue to mine the first 100m of ore which carries transitional ore uncertainty or to sink a $5m decline
A $5m decline should give access to some 900,000t per annum of material where 92% recovery rates are proven in primary sulphides.
The mine, in its current configuration, is a marginal but expansion past 20,000 tpa cu should move the mine to a lower quartile producer.
*SP Angel acts as Joint Broker to Cradle Arc plc
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