Base and precious metals company Cradle Arc has applied for the provisional liquidation of its 60%-owned Leboam Holding subsidiary, which owns the now suspended Mowana copper mine, in Botswana, while talks on alternative funding arrangements continue.
The mine is facing significant working capital constraints after Mowana and Fujax Minerals and Energy could not agree on collateral for the drawdown of its financing facility. It has a conditional $4-million working capital facility from Fujax, from which it had drawn down $1-million.
The provisional liquidation application, which Cradle Arc CEO Kevin van Wouw says is “by no means the end of Mowana”, is set to be heard on Wednesday.
Fujax and Leboam's 40% shareholder have also made a separate application to the Botswana High Court to consider placing Leboam under judicial management and should the court refuse to grant judicial management order, to place it under provisional liquidation.
Cradle Arc opposed the application for judicial management, stating that Fujax had neither provided a viable alternative financing plan for Leboam, nor a credible business plan for the Mowana mine.
"While it is unfortunate that we have had to take this step, provisional liquidation as opposed to final liquidation is by no means the end for Mowana, but rather provides the company an opportunity to continue talks, along with the provisional liquidator, for a sustainable funding solution at the mine,” said Van Wouw.
Operations at Mowana copper mine were suspended last week. Cradle Arc reopened the mine last year after the mine went into liquidation in 2015. It has a production capacity of 12 000 t/y.