| April 1, 2010 |
| African Copper Plc: Financing and Trading Update |
LONDON, UNITED KINGDOM--(Marketwire - April 1, 2010) - African Copper Plc ("ACU" or "the Company") (AIM:ACU)(BOTSWANA:AFRICAN COPPER) is pleased to announce the arrangement of a US$10 million loan ("the ZCI Loan") from its significant shareholder, Zambia Copper Investments ("ZCI"). The monies will be used at its Mowana mine in Botswana to fund the purchase of mobile crushing capacity, the redesign of the Secondary and Tertiary circuit (the "Tertiary Plant"), fund short term working capital requirements and commence further exploration of its Matsitama prospect in Botswana.
Under the terms of the ZCI loan, the Company will receive US$10 million immediately, at an interest rate of 6% per annum payable quarterly, to be repaid on or before 31st March 2011 and may be renewed, subject to ZCI giving its written consent to such renewal, prior to the repayment date. The ZCI Loan will be secured under the existing ZCI Term Loan Facility which includes security over ACU and all other ACU group companies assets, including the Mowana Mine and a guarantee by ACU (see Press Release dated 19 June 2009).
As previously reported in the fourth quarter financial results on 16 February 2010, production at the Mowana mine has been adversely affected by low availability of the Tertiary Plant caused by equipment breakdown and rain that has affected the consistency of the processed ore and hindered the flow of material from stockpiles. To mitigate these problems ACU placed orders with a rental company for the temporary provision of mobile crushing capacity to bypass the Tertiary Plant. Delivery was expected by late February 2010 but due to problems experienced by the rental company in funding the necessary equipment, the delivery was delayed and ACU has subsequently decided to purchase the mobile crushers directly.
The ZCI Loan allows the Company to immediately purchase the mobile crushers and it expects to have these crushers delivered, installed and running within three weeks. At the same time the Company will be engaging consultants to design and implement the required changes to the Tertiary Plant and will update the market accordingly.
As ZCI owns 82.16 per cent. of African Copper's total issued ordinary share capital at the date of this announcement and is providing financing to the Company, the ZCI Loan falls within the definition of a related party transaction under Rule 13 of the AIM Rules for companies. The independent Directors consider, having consulted with its nominated adviser Canaccord Adams Limited ('Canaccord'), that the terms of the transactions are fair and reasonable insofar as its shareholders are concerned.
Key performance details for the Mowana plant in January and February 2010 are set out in the table below:
Jan 2010 Feb 2010 Total
Ore processed (Metric tonnes ("MT")) 28,303 42,925 71,228
Cu grade (%) 22.19 22.91 22.62
Recovery Cu (%) 43.2 48.0 45.9
Concentrate produced (Mt) 651 968 1,619
Copper produced in concentrate (Mt) 144 222 366
Concentrates sold (Mt) 793 922 1,715
Payable copper sold (Mt) 186 185 371
Production in March 2010 has continued to be adversely affected and the Tertiary Plant has been recently shut down pending the installation of the mobile crushers.
The Company also plans further development expenditures including the construction of the wet tailings facility (as set out in the announcement dated 21 January 2010) and a Dense Media Separation plant at the Mowana mine. In addition, ACU is planning deep exploration drilling in and around the Mowana mine and pre-stripping and mining contractor mobilization at the Company's nearby Thakadu deposit which is expected to commence operations in May 2010.
Good progress continues to be made on the wet tailings facility at Mowana. Drawings, scope and bill of quantities for the project have been completed by consultant engineers, Scott Wilson and the tendering process is underway. The Company expects the adjudication of tenders and the award of contract to be completed during April 2010 with commencement of construction in May. An Environmental Management Plan for wet tailings disposal was submitted to the Botswana Government DEA on 1 March 2010 and feedback is expected shortly.
At Thakadu, the Environmental Impact Assessment process is planned to be completed in early April 2010 and the Company is expecting the mining licence by the end of April for mining to start in May 2010. The road from Thakadu to Mowana is currently being upgraded for the commencement of shipping ore.
It is anticipated that this proposed additional expenditure along with the subsequent repayment of the ZCI Loan will be financed by a comprehensive longer term project finance package that is currently being sourced. Indicative term sheets have been received from a number of banks located in Europe and South Africa.
The Company is finalising, with ZCI, a five year strategic plan to fully exploit its assets in Botswana and will make a further announcement when this process is complete.
Commenting, Jordan Soko, Interim CEO and director of African Copper, said, "I believe that we have now understood all of the issues to be resolved at Mowana and identified solutions that can be quickly implemented. With the active support - both financial and operational - of ZCI, we anticipate being able to maximise production from our high quality assets and thus deliver value to all of our investors."
For further information please visit www.africancopper.com.
Notes to Editors:
African Copper Plc is an AIM-listed copper production and exploration company, currently focused on Botswana. The Company's flagship project is the copper producing open pit Mowana mine. ACU also owns the rights to the adjacent Thakadu-Makala deposit. Both deposits are situated on the highly prospective Maritsama belt.
This press release contains forward-looking information. All statements, other than statements of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future including, without limitation, statements regarding the ability of the Company's action plan (including the mobile crusher and wet tailings facility) to improve plant performance, the delivery and installation of the mobile crushing units within 3 weeks, the granting of a mining licence for Thakadu by the end of April 2010, the timing of operations commencing at Thakadu and anticipation of obtaining a longer term project finance package are forward-looking information. This forward-looking information reflects the current expectations or beliefs of the Company based on information currently available to the Company. Forward-looking information is subject to a number of risks and uncertainties that may cause the actual results of the Company to differ materially from those discussed in the forward- looking information, and even if such actual results are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on the Company. Factors that could cause actual results or events to differ materially from current expectations include, among other things, performance of the proposed mobile crusher to process the envisaged volumes, whether the mobile crusher is a cost effective means of replacing the Secondary and Tertiary plant capacity, the timing of the granting of a mining licence for Thakadu, the effect on current and future production on depositing wet tailings into a temporary impoundment in the envisaged tailings footprint, ability to move to full capacity once the proposed action plan is complete, delivery and installation delays of the mobile crusher and the other risks disclosed in the Company's most recent annual information form filed on SEDAR at www.sedar.com. All forward-looking information speaks only as of the date hereof and, except as may be required by applicable securities laws, the Company disclaims any intent or obligation to update any forward-looking information, whether as a result of new information, future events or results or otherwise. Although the Company believes that its expectations reflected in the forward-looking information, as well as the assumptions inherent therein, are reasonable, forward-looking information is not a guarantee of future performance and, accordingly, undue reliance should not be put on such information due to the inherent uncertainty therein. | |