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Johannesburg - Zambia Copper Investments (ZCI) is looking to rescue failed Botswana mining company African Copper Plc (ACU) in its first venture as an operating company.
ZCI became a cash shell in 2008 after the sale of its 24.8% stake in Konkola Copper Mines to Vedanta for $213m.
After that deal enough ZCI shareholders opted to stay on board to back the new management, which set out to re-invent ZCI as an operating company in the base metal field.
ZCI was unable to get its new business plan in place fast enough to avoid being suspended from trading on the JSE, which had reclassified it as a cash shell after the sale of the Konkola stake. Trading in its shares is still suspended.
ACU is listed on AIM, the TSX and the Botswana Stock Exchange. It ran out of cash at the end of 2008 while developing the Mowana copper mine in north-eastern Botswana, and had to put the mine on care and maintenance.
ACU subsequently struck a deal with Natasa Mining to meet its immediate working capital requirements, but the proposal was voted down by shareholders at an extraordinary general meeting on May 7.
Among other conditions, the Natasa deal required all ACU directors and officers to resign and be replaced by Natasa nominees.
In addition, all staff positions would be made redundant except those nominated by Natasa. Numis Securities, ACU's broker and nominated adviser, indicated it would resign at the same time as ACU directors stepped down.
ACU has now accepted a $22.5m financing package offered by ZCI, part of which is a $10m bridge loan which will be used to repay obligations to Natasa Mining and make interim payments to ACU's bondholders and key trade creditors.
ZCI and ACU have also struck a deal with mining contract firm Moolmans, which has assigned its $8m outstanding debt in ACU to ZCI at 50% of its face value.
As part of that debt acquisition, all agreements between ACU and Moolman have been terminated, including Moolman's mining contract for the Mowana mine.
A ZCI statement said on Tuesday that "in order to help secure African Copper's future and accelerate bringing an important mine in the Botswanan community back into production, ZCI has agreed with African Copper that it will not seek repayment of the debt until at least the completion of the entire financing package".
In return, ZCI gets outright control of ACU through subscribing for 676.6 million new shares at 1 pence each, which will give it an interest of 69.7%.
ZCI chairperson Tom Kamwendo said: "ZCI will assist ACU management to optimise the Mowana mine operations and seek ways to expand the mining and processing capability beyond the 25 000t/year envisaged in ACU's current five-year plan."
- Miningmx.com
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