JOHANNESBURG (miningweekly.com) – Aim-listed Alecto Minerals on Wednesday said it was looking to acquire 100% of the shares of Botswana-based holding company Cradle Arc Investments’, which owns the Mowana copper mine, for £6.72-million.

Alecto will acquire a 60% interest in the 683 000 t indicated resource Mowana, a former producing copper mine, and plant which it believes can be brought back into production at a relatively low cost. The mine has an additional 945 000 t copper in the inferred category.

An offtake financing agreement has been agreed by Cradle for $20-million, which will provide funding for investment in the mine and the plant to increase recoveries.

The mine was commissioned in 2008 at a cost of $60-million and operated successfully between 2008 and 2015, processing an average of 775 406 t/y of ore, at an average grade of 1.72% copper.

Alecto intends to perform process route upgrades, including the installation of a dense media separation (DMS) plant to increase throughput from 1.2-million tonnes a year to 2.6-million tonnes a year, to achieve an average copper production of 22 000 t of saleable copper a year.

The company would also remodel the mine to ensure that it can produce from a much lower cost base to generate profit even at depressed commodity prices. At a copper price of $2.50/lb, Alecto's internal estimate for the project's net present value is $245-million.

The process route upgrades, which are expected to cost $20-million, will be funded through an agreement with Fujax Minerals and Energy Limited and Northern Heavy Industries Group Company. Alecto has also agreed a ten-year management contract for Mowana with its partners and will receive management fees equal to 1.5% of revenue.

Alecto CEO Mark Jones commented that Mowana was a “first class copper mining project” and that the proposed acquisition would be transformational for the company, turning the group into a producing miner and materially strengthening its balance sheet.

"I look forward to effectively completing our transformation from a greenfield exploration company into a multi-commodity metals producer in Africa in the coming months, and the team has conducted significant work to ensure that this is achievable. 

“Our technical team has worked tirelessly to generate a robust business model that will target early cash flow from both the profitable mining of copper and the management of the operation. Additionally, our commercial team has secured commitments for funding, so that we can realise the maximum value from copper production and quickly initiate plant improvements at Mowana that are expected to deliver substantial production efficiencies,” he stated.