Gulf starts at Sheikh Adi-2 25/05/2012
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African Copper agrees ZCI deal
Botswana-focused African Copper (ACU) has accepted the $22.5 million (£15 million) financing package from Zambia Copper Investments (ZCI).
In a deal designed to enable hard-pressed ACU to develop its promising Mowena mine with ZCI in control and release it from its debt obligations to entrepreneurial Chris Kyriakou’s Australian group, Natasa Mining, Johannesburg-quoted ZCI has offered ACU a $10 million (£6.6 million) bridging loan facility. ZCI is also providing an $8.1 million 12 per cent loan facility, convertible into shares at a lowly 1p, and a $2 million 14 per cent short-term secured credit facility, as well as other facilities.
This financing package age will make it possible for AIM-quoted ACU, steered by chief executive officer Chris Fredericks, to repay a $1.5 million bridging loan from Aussie-quoted Natasa, which put an earlier financing offer on the table that would have given it 70 per cent of ACU and reduced existing shareholders’ stake to 6.5 per cent. ZCI is also to subscribe $9.9 million for ACU shares at 1p and proposes that ACU’s mining contractor and other trade creditors be paid 40 per cent of what they are owed in cash and given shares for the rest, with bondholders repaid 25 per cent while either holding their remaining bonds or accepting new ones.
These proposals will leave ZCI owning 69.73 per cent of ACU, with existing shareholders holding 15.1 per cent, bondholders 10.09 per cent and trade creditors 5.05 per cent. ZCI non-executive director David Rodier will become chairman of African Copper.
Mowena had been snarled by previous copper price falls. Now, Tom Kamwendo, chairman of ZCI, says his company will help ACU expand its mining and processing capability there ‘beyond the 25,000 tonnes a year envisaged in ACU’s current five-year plan’.
Floated at 76p five years ago, African Copper shares had collapsed to 0.7p by last February. They have now bounced to 5.12p, valuing the company at £7.5 million.
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