Cupric Africa: developing Botswana’s mineral assets
Cupric Africa (the mining arm of Cupric Canyon Capital) has positioned itself to become a significant player in Botswana’s copper sector; having complied with various regulatory measures and having deployed its resources strategically, the company is now set to solidify production at one of the most important copper discoveries in the past few years.
In 2013, Cupric Canyon Capital acquired two important mining properties in connection with its purchase of Hana Mining; these are known as ‘Banana Zone’ and ‘Zone Five’ and contain significant copper deposits, including some silver credits. Sam Rasmussen, Cupric’s CEO for Africa, explained that, following some previous exploration and drilling undertaken by the previous owners, the company had stepped up work, particularly in Zone Five.
He said: “There was a very small time period from when Cupric took over to the realisation that we should step up operations at Zone Five, where geologists realised that there was more copper than we first realised.
“Banana Zone is large, with low grade copper; Zone Five is also large (now very large!) And has very high grade. Cupric began drilling in 2013 and went where Hana hadn’t covered. The drilling totals around 175,000 metres, mainly concentrated on Zone Five.”
“As you drill and identify so much reserve or resource is the better word you have to put plans to it. We put plans to that and on March 9 2015 we were granted mining licenses to both sites. The mine continues to get bigger and the studies we do also have to grow. We have a robust project as it is, but it’s getting larger and the grades are increasing; we are seeing some higher grade deeper down.”
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As the current phase of drilling in Zone Five nears completion, the deposit is expected to contain nearly 100 million tonnes of mineable sulphide copper ore, Rasmussen said: “We are expecting 50,000 tonnes per annum of copper metal over the ten year period; that translates to 125,000 tonnes per annum of concentrate annually.”
He added that Zone Five also contained silver credits which are about 380 grams of silver per tonne of concentrate, providing roughly 1.5 million ounces of silver each year. The copper concentrate has an average of about 40 percent purity.
Being in a financial position to weather the challenges of the copper industry (not to mention the recent fall in global copper prices) Cupric has been able to leverage its strong capital position to strategically acquire assets that will complement its operations.
Cupric’s wholly owned subsidiary, Khoemacau Copper Mining Pty. Limited (KCM) acquired the Boseto assets and licenses formerly owned by Discovery Metals Limited when it went into liquidation earlier this year.
Rasmussen said: “We purchased the Boseto operations from a liquidator for $34 million. Now we will combine the Boseto plant infrastructure with the Zone Five mine which will come together to make an attractive copper and silver concentrate producing operation”
Specifically, the Boseto plant will provide Cupric with a milling capacity which is located only 30 kilometres from Zone Five’s operations; these combined factors will enable the company to make significant capital expenditure savings in the mid to long term.
The volume and quality of Cupric’s mineral asserts (particularly copper) has put the company at a naturally competitive advantage, but the company also strongly benefits from its strategic financial partnership with Barclays Natural Resource Investments (BNRI).
Rasmussen said: “We have 2 percent copper in the ground at Zone Five whereas Banana Zone was only 0.6 percent over all. This is obviously a marked change and with the structurally controlled nature of the Zone Five deposit allows it to be readily and easily mined using underground methods.
“In terms of size, we have identified about 100 million tonnes of resource. We have a 3.6 million tonne per annum plant, a 25 plus year lifespan. Size is how we distinguish ourselves. We have a larger denominator, therefore our unit costs are down. I can safely say that on operating costs we are in the lowest quartile of copper producers.”
He also explained that receiving the majority of its funding from BNRI was also a strategic advantage, since the bank had a seat on the board, supported by a team of industry experts. He added: “Barclays are obviously very big. They’re experienced and results driven, and they have a very thorough methodology. For every dollar we spend they rightly expect to see an increase in value.”
Clare Calver, Head of Human Resources and Communications explained that not only did her team have to tackle the ‘everyday’ Human Resources trials faced by mining companies, but also navigate the challenges of operating in a remote part of Botswana. She explained how the company was facing up to this challenge: “We have done a lot of benchmarking – we have worked with consultants based in Botswana to inform our benefits strategy.”
“We have made a commitment to the local communities where we look to resource lower-skilled positions from the local communities and the local district. Expatriates are built into our model and will be a reality for the first few years of our operation. We will have a job shadowing programme; for every expat we find a national counterpart. Skills transference will be closely monitored.
“We are very mindful of the psychosocial aspect – they are surrounded by bush and sand for three weeks at a time. We operate in a very remote part of the country and try to keep our staff busy on the social side so they have other outlets. We make sure that they have recreational opportunities. We have been very successful thus far and will continue to be so.”
Furthermore, she added that Cupric Africa has gone beyond the norm in an effort to ensure that its workforce is well looked after, backed up by the consultancy work taken with Botswana specifically in mind. This has culminated in the provision of a comprehensive employee benefits package which includes pensions, medical aid and bonus schemes.
In short, in just a few years Cupric has been able to become a significant player in Botswana and has done so by not only making the right financial investments, but also by ensuring that its teams are both well trained and well provided for. Its future, and potential legacy in the region are certainly both exciting.
Barrick profit beats expectations as copper, gold prices up
Barrick Gold has reported a 78% jump in first-quarter profit, beating analyst expectations thanks to rising gold and copper prices, and said it was on track to meet annual forecasts.
Production in the second half is expected to be higher than the first, the gold miner said, thanks in part to the ramp-up of underground mining at the Bulyanhulu mine in Tanzania and higher expected grades at Lumwana in Zambia, reports Reuters
Barrick’s first-quarter gold production fell to 1.10 million from 1.25 million ounces due partly to lower grades at its Pueblo Viejo mine in Dominican Republic.
Adjusted profit surged 78% to $507mn in the quarter ended March 31, from $285mn a year earlier, and Barrick announced a 9 cent per share quarterly dividend.
Stronger prices helped boost Barrick’s revenue from its copper mines in Chile, Saudi Arabia and Zambia by 31% from the fourth quarter. Overall earnings per share were $0.29, ahead of analysts’ estimate of $0.27.
“We expect a positive stock reaction to the earnings beat and strong cash flow,” said Credit Suisse analysts.
Potential for South Africa merger
Barrick CEO Mark Bristow, who has championed mergers across the gold industry, said he backed the idea of South Africa-listed miners Goldfields and AngloGold Ashanti combining.
Speculation has been swirling around the two companies and Sibanye-Stillwater, whose CEO Neal Froneman floated the idea of a three-way merger.
“I’m a South African, and this country has such a great mining history and it would be great to see a real gold business come out of the many failed discussions that we’ve seen,” said Bristow.
Goldfields declined to comment. In a statement, AngloGold Ashanti said it was focused on delivering on its growth plan to unlock value from its portfolio of gold assets.
Bristow also said he had met with the Democratic Republic of Congo’s new mines minister and other officials and was continuing to work on getting $900mn belonging to its Kibali mine joint venture out of the country.
“We have a solution, it just needs to be sanctioned by the appropriate authorities which haven’t been around for a while,” he said, referring to a recent government overhaul by President Felix Tshisekedi.