Alecto Minerals takes over the Botswana Mowana copper mine
Alecto Minerals PLC has announced it is to take over the mothballed Mowana copper mine in Botswana and bring it back on stream.
The deal will be structured as a reverse takeover, with the current owner of the mine in north eastern Botswana ending up with a controlling stake.
Alecto said copper mines in Africa have struggled with its low price recently and years of poor management but this is an opportunity where it can produce at much lower costs than previously.
The deal will see Alecto will acquire a 60% interest in Mowana subject to the regulatory and shareholder approval hurdles and have a ten-year management contract.
Shares have been suspended while this process works through with Alecto also mulling a convertible fund raise to bring in additional capital and an equity funding when the shares resume trading again.
The consideration is about £6.7mln made up of £1mln cash and the rest in shares.
Alecto believes Mowana can be brought back into production for US$20mln, which will be met through offtake and vendor financing deals.
At a copper price of US$2.50 per lb, Alecto's internal estimate for the project's net present value is US$245mln.
Mowana has a resource of 683,000 tonnes of copper in the Measured and Indicated categories.
The mine operated between 2008-2015 before it was shut, but Alecto believes it can remodel the operation to slash its costs.
A Dense Media Separation plant to increase throughput to 2.6mln tpa and lift copper production to 22,000 tonnes per year.
The vendor is PemMin Botswana, a controlled by Kevin Van Wouw a specialist mining contractor based in South Africa.
Following completion of the deal, PenMin and Gerald Chapman, a director of Alecto who was involved in the transaction, will own 29.9 percent each of the AIM-listed group.
Mark Jones, Alecto’s chief executive, believes Mowana is a first-class copper mining project and represents an ideal opportunity to achieve a complete transformation of Alecto.
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