PERTH (miningweekly.com) – ASX-listed Discovery Metals has secured a $110-million investment from equity fund Castlepines Global Equities to develop the Zeta underground mine at the Boseto copper project, in Botswana, and to pay its debts.

Discovery was forced to hunt for new funding after revealing earlier this month that its negotiations with Cupric Canyon Capital regarding the possible sale of Boseto mine had failed.

Under the terms of the memorandum of understanding (MoU) inked with Castlepines, the equity investor would invest $110-million in Discovery’s wholly-owned subsidiary Discovery Copper, which owns the Boseto project.

In return, Castlepines would receive a 34% interest ownership in Discovery Copper.

Discovery’s 66% remaining ownership in Discovery Copper would be pledged as security to Castlepines during the 12-year term of the investment. The investment would attract a commercially competitive coupon rate, which would be subject to an annual fixed escalation factor.

“It is very pleasing for Discovery to have been able to attract an investor of the caliber of Castlepines, to assist us with our plans to enable the development of our planned underground mining and operations at Boseto,” said Discovery MD Bob Fulker.

He noted that the Zeta underground mine had been a key strategic component of the Boseto development plan since its inception in August 2010.

“This was reaffirmed during our life-of-mine planning that was completed in early 2014. The future of the Boseto operation, and the entire mineral district, lies in the development of underground mining.”

The Boseto mine was expected to be mothballed in the next six months, after a review of the openpit operations determined that the prevailing high strip ratio would result in a high operating cost environment, which was not sufficiently cash flow positive in light of the prevailing copper price.

However, Discovery was still pursuing the development of the Zeta underground mine.

“I have high hopes that within the Boseto mineral district we will have a minimum of three distinct mines with potentially five declines over the next decade, of which the Zeta underground will be the first,” Fulker said.

The closing of the financing was expected to take place following the execution of definitive documentation between the two parties, as well as Discovery satisfying any conditions precedent.

The MoU was subject to a number of conditions, including a due diligence study, the implementation of risk management strategies, as well as government and board approval by both companies.