Botswana copper sector gets second boost after MOD unveils $182m T3 Project

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Kalahari, Botswana

BOTSWANA’S emerging copper industry received a second boost in two months after Sydney- and London-listed MOD Resources outlined proposals for a $182m mine producing 28,000 tonnes a year of copper, as well as 1.1 million ounces of silver.

Following ramp-up which would be completed by 2022, the mine – known as T3 Copper Project – would average 30,000 tonnes of copper in its first seven years of full production. This is according to a feasibility study which envisages a mine life of 11.5 years.

The company said today it had received “expressions of interest” from global and top-tier debt institutions regarding funding the project. MOD Resources was also advancing “… discussions with a number of potential strategic parties for non-debt funding,” it said in reference to potential equity or offtake participation.

Shares in MOD Resources were 4.3% higher in London today following the announcement. The share is 43% higher than the firm’s 12-month low reported in January.

Botswana is known for its diamond industry, but the southern African government has long made known its intentions to diversify its economy.

In February, Khoemacau Copper Mining, a subsidiary of US-based, Cupric Canyon Capital, said it had secured $565m in debt as well as royalty funding for construction of a mine that is scoped to produce some 3.6 million tonnes of copper in its first phase from 2021. This development also included smelting facilities.

Some of the key numbers from the MOD Resources’ feasibility study are that the mine will have an estimated life of mine revenue of $2.3bn and pre-tax earnings of $1.1bn. Payback will be in 3.7 years from production start. A pre-tax net present value of $368m has been imputed to the mine and an internal rate of return of 33%.

MOD Resources MD, Julian Hanna, said the T3 Project was a “relatively straight-forward open pit mine and processing plant requiring moderate capital expenditure to bring it into production”, adding that it would make money at a copper price lower than the prevailing price. Goldman price last put the spot price of copper at about $6,446/tonne ($2.85/lb).

According to the feasibility study, the mine would have life of mine all-in sustaining costs of $1.56/lb Cu after deducting silver credits.

In January, MOD Resources rejected a $63m all-share takeover offer from Sandfire Resources, saying it undervalued the firm and that it had sufficient capital to take its T3 Copper Project, to an investment decision.

However, it kept the door open to a higher offer. In a statement at the time in which it also confirmed it had raised $15m through a share placement and a separate rights offer, it said it would “… continue to explore all options including further engagement with Sandfire”.

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