Khoemacau Copper Mines, owner of the Khoemacau copper/silver project in Botswana, has added an $85-million equity component to its project funding package, bringing total available funding to $650-million.
All components of the package closed simultaneously earlier this week, and first draws are currently under way, the company said on Friday.
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, giving it 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 R650-million, which will be used for the construction of Khoemacau’s 3.6-million-tonne-a-year starter project.
The starter project will process ore from a 91-million-tonne resource, at a head grade of 2% copper and 21 g/t silver.
First copper concentrate production is expected in the first half of 2021, with yearly production averaging at 62 000 t of copper and 1.9-million ounces of silver for over 20 years.
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.
As well as providing cost overrun support, the project’s funding package also funds the expansion project studies, engineering and permitting work, and the exploration programme for the next two years.
On June 24, Khoemacau executed a five-year, $560-million, underground mining contract with subsidiary of international mining services group Ausdrill, Barminco, and, following 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.
According to Khoemacau CEO Johan Ferreira, the introduction of RCF brings an “industry leading” investor to the financing group, while the increase in the project funding package provides the flexibility necessary to financially de-risk the development.
The closing of the project funding package, along with the execution of the underground mining contract with Barminco, allows Khoemacau to move forward with all project development activities at full pace.