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Khoemacau gets an extra $900 million boost

Publishing Date : 19 August, 2019


Ongoing development of the Khoemacau Copper & Silver Project by Cupric Canyon Capital has received an additional funding worth $85 million, approximately P900 from Global Natural Resources Investments and Resources Capital Fund, Khoemacau Copper Mine announced on Thursday.

The company which is a subsidiary of Cupric Capital revealed that subsequent to its announcement of 25 February 2019, a US$85m equity component has been added to its Project Funding Package, bringing total available funding to US$650m , approximately P7 billion.
In February 2019, Cupric Canyon Capital, which at that time was the sole owner of Khoemacau Copper Mines announced the signing of a US$565 million project funding package that comprised of a US$275 million senior debt facility from Red Kite Mine Finance and US$212 million to US$265 million silver stream from RGLD Gold AG a wholly owned subsidiary of Royal Gold, Inc. and a US$25 million subordinated debt Facility from RG AG.

In a statement released on Thursday  Khoemacau says within the additional $85 million boost is Global Natural Resource Investments (GNRI) investment of US$15 million further to its current equity investment, while Resource Capital Fund VII has subscribed for US$70 million of ordinary equity in the Khoemacau group of companies, giving it an effective 11.9% interest in Khoemacau.

The company said in the statement that all components of the Package closed simultaneously and first draws are already underway. This funding from RKMF and RG AG, combined with the US$85 million of new equity, provides the Company with total funding of US$650 million around P7 billion.

The Project Funding Package will be used for construction of Khoemacau 3.6 million tonnes per annum Starter Project, processing ore from a 91 million tonne resource,  at a head grade of 2% copper and 21g/t silver. First copper concentrate production is expected in the first half of 2021, with annual production averaging 62,000 tonnes of copper and 1.9 million ounces of silver for over 20 years. The construction cost of the Starter Project is US$397 million over a two-year construction timeline.

The balance of the Project Funding Package covers working capital and corporate general and administrative costs, financing costs during construction, and repayment of the existing US$105m RKMF Bridge Loan. This Bridge Loan has funded all company activities, including exploration, detailed engineering and early construction activities, since late 2016. As well as providing cost overrun support, the Project Funding Package also funds the expansion Project studies, engineering and permitting work, and the exploration program for the next 2 years.

In June this year Khoemacau executed a 5-year, US$560 million, underground mining contract with Barminco, a subsidiary of international mining services group Ausdrill Limited. Following closing of the Project Funding Package, Khoemacau says Barminco is now proceeding with mobilization and readiness to commence execution of the Zone 5 underground mine in December 2019.

Early construction activities have been underway on the Khoemacau Project site since the beginning of 2019. There are now more than 700 people on site carrying out construction work including boxcuts for underground access, roads, a water pipeline and terraces for surface infrastructure. To date some 7.8% of the project capital cost, or US$31 million, has been spent on these activities, while some 57% of the capital costs have now been committed.

On Tuesday Global Engineering & Project Management Group Fluor Corporation announced that I has been awarded Engineering Procurement & Construction Management Contract for the Khoemacau Copper & Silver Project.Fluor’s scope entails upgrading the existing copper concentrator plant and new mine surface infrastructure.

Early July this year the President Mokgweetsi Masisi led the ground breaking and official opening of the Khoemacau Project. In his address President Masisi noted the signiwficant scale of the project and the associated investment, and that it bore testimony to the country’s attractiveness to foreign direct investment. President Masisi further recognized the importance of this project to the local economy and indeed Botswana.

Commenting on the additional funding Chief Executive Officer of Cupric Canyon Capital   Johan Ferreira said the introduction of RCF brings a further industry leading investor into the financing group. “While the increase in the Project Funding Package provides the flexibility necessary to financially de-risk this development and also secures the funding to continue exploration and feasibility work on our exciting expansion options” he said.

Ferreira says  the closing of the Project Funding Package, along with the execution of the underground mining contract with Barminco, allows  Khoemacau now to move forward with all project development activities at full pace, and marks a significant milestone in this company’s development.



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