30 November 2012

Namibia: Govermentt Buys Ten Percent Stake in Husab

IN a transaction valued at nearly N$1,9 billion, state-owned Epangelo Mining Company has secured a 10% stake in Swakop Uranium’s Husab Mine, set to make Namibia the third biggest uranium producer in the world.

The deal, signed on Wednesday, saw Epangelo acquire a non-dilutable, fully-funded and ring-fenced equity participation in Swakop Uranium, including board participation and support in other operational aspects.

“We haven given [Epangelo] a loan at commercial interest rates to cover the acquisition, which Epangelo will pay back from their dividends over the next 15 years,” Swakop Uranium’s corporate strategy and business development manager, Grant Marais, told Reuters.

The other 90% of Swakop Uranium remains in Chinese hands through Taurus Minerals Limited. Taurus is owned by CGNPC-URC and the China-Africa Development Fund. CGNPC-URC is a wholly-owned subsidiary of China Guangdong Nuclear Power Holding Co Ltd (CGNPC), which in turn is owned by the Chinese government.

Mines and Energy Minister last year announced that the mining and exploration rights of all strategic minerals in Namibia belonged to Epangelo, and that foreign companies would have to partner with the state-owned enterprise.

Last November, Epangelo closed an agreement with CGNPC, at that stage still in negotiations with UK-based Kalahari Minerals PLC to get control of Swakop Uranium, to acquire 10% of Husab. Shortly after that, Government granted Swakop Uranium its mining licence.

Husab’s development will cost about N$21 billion, Swakop Uranium deputy chairman Zheng Keping said on Wednesday. Last December, Husab’s development price tag was still in the vicinity of N$12 billion. Zheng said N$1 billion of the estimated N$21 billion has already been spent.

The investment in Swakop Uranium isn’t only China’s biggest investment in Namibia since Independence, but also China’s single biggest in Africa, Xin Shunkang, ambassador of the People’s Republic of China to Namibia, said.

“We are confident that Epangelo Mining will be a significant vehicle to ensure Namibia’s increased national participation in the mining sector and provide a venue for win-win co-operation between the two countries: the Republic of Namibia and the People’s Republic of China,” Katali said at the signing ceremony.

Epangelo managing director Eliphas Hawala said the 10% stake “marks a very significant chapter in the Namibian mining history in general and also a huge milestone for Epangelo Mining Company in particular”.

“We are confident that we will be able to build on the spirit of the negotiations to ensure that the Husab Mine also looks at other social and economic aspects such as local procurement for small and medium enterprises, local recruitment of senior management, involvement in social responsibility programmes, training and education and so forth,” Hawala said.

Zheng said about 800 000 metres of drilling has been undertaken over a period of three years to improve the resource. He said the Husab project has been brought to this stage of development in record time by a dedicated and professional management team, engineers and staff.

Construction on the mine is scheduled for this year still and production is expected to start towards the end of 2015.

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