JOHANNESBURG (miningweekly.com) – Zambia Copper Investments (ZCI) subsidiary African Copper has signed an unsecured loan facility of $1.5-million with its majority shareholder, the Copperbelt Development Foundation (CDF), but warns that this funding inflow may not be enough to keep the company’s doors open beyond June.

The copper producer said on Thursday that the early termination of the Thakadu mine, in Botswana, coupled with unforeseen shortfalls in production had resulted in a current working capital deficit.

While the loan would provide it with additional working capital, African Copper would continue to conduct a review of its operations with the aim of conserving cash and addressing its current and future funding requirements.

Following receipt of the $1.5-million from the CDF, the group estimated that it would require further funding in June.

“[African Copper] and ZCI, acting together, continue to take steps to secure additional long-term funding. Should the group not secure additional funds and, if current market conditions prevail, the “[African Copper] board believes [it] may not then be able to continue as a going concern,” the company said in a statement.

The facility had an interest rate of 9% a year, with the principal and accrued interest repayable in three equal monthly installments of $500 000 from September 4 and repaid in full by November 5.

The company outlined that operations at Thakadu, which was nearing the end of its scheduled mine life, had recently revealed significant variability in ore grades compared with the geological resource model.

The company believed that, to confirm future grades, it would be necessary to conduct medium-depth high-resolution drilling.

“However, owing to the short remaining mine life, a smaller mining footprint and the cost associated with such a drilling programme, the company has taken the decision to stop mining at the Thakadu pit by the end of May, with processing from accumulated ore stockpiles continuing until end of June,” it noted.

African Copper had, meanwhile, also developed an interim mining and processing plan, which covered a period of 18 months following the end of operations at Thakadu in June.

This plan envisaged mining Mowana ore at a significantly reduced rate, producing copper to cover operating costs while conserving cash through tight cost control.

“This interim plan provides financial headroom for management to develop the new life-of-mine (LoM) for refinancing purposes and management has commissioned a plant
optimisation feasibility study intended to increase crushing capacity and to increase feed grade to the mill through a dense media separation plant,” it outlined.

Positive testwork results had since been received and the full bankable feasibility study was continuing, with a final report expected by the end of September.

Management had also started the process of new LoM planning with an updated Mowana resource model, which formed the basis for the optimisation work planned for the end of June.

Meanwhile, African Copper was also seeking shareholder approval to delist from the Aim and the Botswana Stock Exchange. Shareholders would vote on this at a general meeting to be held on May 27.