Name of the Project
Khoemacau copper/silver project.

Location
North-west Botswana.

Project Owner/s
Khoemacau Copper Mining (KCM), a subsidiary of Cupric Canyon Capital.

Project Description
The project entails the construction of KCM’s 3.6-million-tonne-year starter project, processing ore from the 91-million-tonne resource at a head grade of 2.02% copper and 21.4 g/t silver copper.

The company plans to develop the Zone 5 orebody as three separate underground mines, each producing 1.2-million tonnes a year (together 3.6-million tonnes a year) on average for the first five years.

Each of the mines will have its own independent ramp access and operate over a strike length of about 1 000 m, extracting ore using a conventional sublevel open-stoping mining method.

The mined ore will be trucked 35 km to the Boseto processing facility, which will be refurbished and enhanced to process 3.65-million tonnes a year. Processing will be conventional sulphide flotation using three-stage crushing, ball milling and flotation, which will produce a high-quality copper concentrate grading at about 40% for shipment to African and international smelters.

The underground mine will be fully mechanised.

Initial production is estimated at an average of 62 000 t/y of copper and 1.9-million ounces of silver.

In addition to Zone 5 resources, there are a further 93.5-million tonnes of high-grade ore grading 1.9% copper and 33 g/t silver across the Khoemacau project. KCM plans to develop these resources in conjunction with the construction of the starter project.

The long-term plan is to expand Khoemacau to about 5.8-million tonnes a year through the expansion project, whereby a new standalone process plant will be built at Zone 5. The project is expected to produce more than 100 000 t/y of copper.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
Not stated.

Capital Expenditure
The direct construction cost of the starter project is $397-million.

Planned Start /End Date
First copper concentrate is expected to be produced in the first half of 2021.

Latest Developments
KCM has added an $85-million equity component to its project funding package, bringing total available funding to $650-million.

All components of the package have been closed and first draws are under way.

Funds advised by Global Natural Resource Investments (GNRI) will invest $15-million, further to its current equity investment, while Resource Capital Fund (RCF) VII has subscribed for $70-million of equity in the Khoemacau group of companies, providing it with an effective 11.9% interest in Khoemacau.

In February, Khoemacau and Cupric Canyon Capital, which at the time was the sole owner of Khoemacau, announced the signing of a $565-million project funding package that comprised a $275-million senior debt facility from Red Kite Mine Finance (RKMF) and a $212-million to $265-million silver stream from Royal Gold subsidiary, RGLD Gold.

The funding package also included a $25-million subordinated debt facility from RGLD.

This funding from RKMF and RGLD, combined with the $85-million of new equity, provides the company with total funding of $650-million, which will be used for the construction of Khoemacau’s 3.6-million-tonne-a-year starter project.

The construction cost of the starter project is $397-million over a two-year construction timeline.

The balance of the project funding package covers working capital and corporate general and administrative costs, financing costs during construction, and repayment of the existing $105-million RKMF bridge loan.

The bridge loan has funded all company activities, including exploration, detailed engineering and early construction activities, since late 2016.

The project’s funding package provides cost overrun support and also funds the expansion project studies, engineering and permitting work, as well as the exploration programme for the next two years.

On June 24, Khoemacau executed a five-year, $560-million, underground mining contract with Barminco, a subsidiary of international mining services group Ausdrill. Following the closing of the project funding package, Barminco is now proceeding with mobilisation and readiness to start execution of the Zone 5 underground mine in December.

Early construction activities have been under way on the Khoemacau project site since the beginning of this year.

To date, about 7.8% of the project capital cost, or $31-million, has been spent on the construction activities, while about 57% of the capital costs have now been committed.

The closing of the project funding package, along with the execution of the underground mining contract with Barminco, enables Khoemacau to move forward with all project development activities at full pace.

Key Contracts and Suppliers
Fluor Group (engineering, procurement and construction management contract) and Ausdrill subsidiary Barminco (underground mining services contract).

On Budget and on Time?
The owners project team is being mobilised and the front-end engineering design phase is under way. Construction is expected to start in 2018.

Contact Details for Project Information
Cupric Canyon Capital, tel +1 480 607 6771 or email ccc@cupriccanyon.com.