Khoemacau Copper Mines (Khoemacau) and Cupric Canyon Capital have announced major progress towards the construction of the Khoemacau copper/silver project in Botswana with the signing of a ‘Project Funding Package’ to commence development of the project. Khoemacau is owned by Cupric Canyon Capital.
The highlights include US$565 million of funding including a US$275 million senior debt facility from Red Kite Mine Finance (RKMF), a US$265 million silver stream from Royal Gold AG (RG AG), a wholly owned subsidiary of Royal Gold, Inc, and a US$25 million subordinated debt facility from RG AG.
The funding will be used for construction of the Khoemacau Starter Project processing ore from a 91 Mt resource at a head grade of 2,02 % copper and 21,4 g/t silver copper. The direct construction cost of the Starter Project is US$397 million over a two-year construction timeline.
Khoemacau and Cupric (together referred to here as the ‘company’) have been developing the Khoemacau project, a 4 040 km2 land package in north-west Botswana, over the past six years. One of the deposits within the project, Zone 5, was initially discovered in 2012 and has since become the flagship deposit since it was acquired in 2013. Since then, the company has drilled 285 000 m, completed permitting and land access agreements, secured the required power and water, and undertaken advanced engineering, procurement and mobilisation such that it is ready for full construction release of the Starter Project, pending closing of the project funding package.
In 2015, Khoemacau and Cupric acquired the Boseto assets (a previously operated copper project adjacent to Zone 5) following the insolvency of that company’s parent. This acquisition offered access to the 3,0 Mt/a Boseto processing facility located 35 km from Zone 5 along with extensive infrastructure, and various mineral resources and licences. Since acquisition, the Boseto assets have been incorporated into the Starter Project development plan.
The Starter Project development plan now involves the fully mechanised underground mining of sulphide ores at Zone 5 at a rate of 3,6 Mt/a using the upgraded Boseto processing facility for crushing, milling, flotation and production of a high-grade copper/silver concentrate.
The Starter Project is expected to produce a high quality copper concentrate with an average grade of approximately 40 % copper and high-grade silver. This results in annual average production of 62 000 tonnes copper and 1,9 Moz silver per annum over a 21-year mine life. The average life-of-mine C1 cash costs, net of silver by-product credits, are US$1,47/lb at consensus pricing and US$1,67/lb including sustaining capex, and before accounting for the silver stream.
With financial close expected early in the second quarter of 2019 and a two-year construction timeline, the Starter Project is forecast to produce first concentrate beginning in the first half of 2021.
Johan Ferreira, CEO of the company, commented: “Securing the Project Funding Package by partnering with two of the industry’s leading global providers of mine finance, Royal Gold and Red Kite, allows us to move forward energetically with all project development activities. This step marks the completion of a remarkable evolution of the company from discovery of Zone 5 in 2012 to full construction of a high-quality copper asset in 2019.
“Being able to commence the development of a large scale fully mechanised mine and deliver high-quality jobs and sustainable development in the Kalahari Copper Belt reflects not only the quality of the mining environment in Botswana but also the strong support of Government towards foreign investment and new mine development.”