Thato Moseki
3 July 2009
Shareholders of emerging copper and silver miner, Discovery Metals Limited (DML), recently approved a P22 million cash injection via share placement towards the Boseto Copper Project in Maun.
At the Australian miner's General Meeting held last Thursday, shareholders overwhelmingly approved the issue of 22 million ordinary shares valued at P22 million (4 million Australian Dollars) to Macquarie Bank Limited and Taurus Fund. At the meeting, held in Sydney, Australia, 95 percent of shareholders present voted in support of the share placement with Macquarie and Taurus.
The deal means Macquarie has increased its stake in DML from 14.4 percent, while Taurus has also added to its existing 13.1 percent shareholding in the Australian company.
DML officials said the placement was part of a slew of capital raising initiatives towards the finalisation of the Boseto Project's Bankable Feasibility Study. In February, DML raised P12.6 million through a placement to shareholders, while in April it raised P8.2 million through the same arrangement.
DML Managing Director, Brad Sampson praised shareholders for their continuing confidence in the potential of the Boseto Project.
"It is pleasing to have the continued support of our substantial shareholders through this period of difficult market conditions. For companies such as Discovery Metals, shareholder support is vital for us to complete the Bankable Feasibility Study and progress to the project stage and funding of the Boseto Copper Project."
"This placement to Taurus and Macquarie completes a round of fund raising commenced in February and includes the previously announced Resource Capital Fund and London placements," he said.
According to Sampson, the Bankable Feasibility Study (BFS), which started in the third quarter of 2009, is nearing finalisation.
"The BFS started last August and thus far, it's about 40 percent to finalisation; we expect to be done by the first quarter of next year. We are on track to complete this.
"This year, we will continue with infill drilling and we have an engineering companion site doing this. We are on track for production by 2011; we believe we will be able to deliver a concentrate to the market by 2011," said Sampson.
Consultants involved in the BFS include Snowden who are conducting resource estimation, mining engineering and geotechnical services.
It is expected that Boseto will be an open pit mining operation. GRD Minproc are providing engineering design and cost estimates, while Mintek is conducting metallurgical test work. SRK Johannesburg are estimating the ground water resource and also overseeing the Environmental Impact Assessment and Social and Community Studies. SRK Sydney will conduct an independent review of the BFS.
Water exploration drilling has been completed, while peer review of water modelling is underway. Consultants expect to sign off water resource studies before the third quarter of 2009.
Off take discussions with multiple potential partners continue, with the assumption that all concentrate will be shipped to overseas smelters. Other components such as transport, power and security of tenements have been finalised.
The Environmental Impact Assessment and Social and Community Studies are being finalised with reports due soon. However, DML does not expect any major objections from the community or impact to the environment as a result of the development of Boseto.
"By the end of this month, we expect to be in a position to report back to the community about what has come out of the EIA but there's nothing of concern that could be a problem to the community or the project," said Sampson.
DML expects to raise at least US$140 million (P973.3 million) through equity and debt financing before the end of the year. The funds are expected to power Boseto through to commissioning and production.
"Several commercial banks have expressed interest in the project. Already, we have strong institutional support from the equity side, but we don't believe our existing investors will be able to provide the total capital expenditure of US$131 million.
"We are in discussions with potential equity investors and we hope financials will be in place by 2010," said Sampson.
The Boseto Copper Project will become Botswana's biggest copper operation, overtaking BCL Mine in Selebi-Phikwe, while simultaneously becoming the pioneer in silver production in the country.
With a resource of 50.2 million tonnes at 1.5 percent copper and 17.8 grammes per tonne of silver, Boseto will be the star attraction in 2011 when it is expected to come on stream.
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