African Copper Plc
AIM : ACU

African Copper Plc

November 29, 2010 02:00 ET

African Copper Plc (AIM: ACU, BSE: African Copper) Funding of USD7.5 Million Secured for Growth Projects and Plant Enhancements

LONDON, UNITED KINGDOM--(Marketwire - Nov. 29, 2010) - African Copper Plc ("ACU" or "the Company") (AIM:ACU)(BOTSWANA:AFRICAN COPPER), the AIM-listed copper producer and exploration company, currently focused on Botswana, announces that it has secured a loan (the "ZCI Loan") of USD7.5 million from its controlling shareholder ZCI Limited ("ZCI"). The purpose of this debt funding is to enable exploration drilling on the Company's Matsitama Exploration Project and Mowana North deposit and the completion of a scoping study for the Makala deposits as well as plant enhancements.

The Matsitama project, nearby to ACU's producing Mowana mine, encompasses the highly prospective Matsitama Schist Belt, which has demonstrated similarities to IOCG deposit types, and consists of four licences totalling 2,276km2 in extent. ACU has hired an experienced exploration manager to oversee the project over the next year and secured the services of a panel of internationally recognised geological experts to help generate new exploration strategies, refine mineral emplacement and deposit models, and assist in target generation. This will ensure that exploration commitments of the Company are met and exploration expenditures optimally spent, in order to allow ACU to apply for retention licences over a portion or portions of the exploration permits by mid-2011.

Since May 2010, four workshops have been held on site in Botswana with various members of the Company's expert exploration panel. Work completed included a review of the Company's extensive exploration datasets, the reinterpretation of the geophysics data, field-based structural studies, and the submission of a suite of samples for age dating purposes. Ten new and highly prospective targets have been identified during the review process by both the expert panel and Matsitama exploration staff and fast-track exploration programmes have been designed to allow the targets to be assessed within the available time frame. The drilling work on these targets has commenced with a view to complete all drilling fieldwork before the onset of the rain season.

At Mowana North, a single deep diamond-drill hole was commenced in May 2010 and completed by July 2010. This 1,200m deep hole revealed good copper mineralisation starting at 49m below the surface over a vertical depth of 1,000m. New drill targets have also now been identified and a drilling programme drawn up. Drill results from this area will have a direct impact on the future plans for an underground mine at Mowana.

The Makala deposit has been previously drilled extensively by BCL with additional drilling by ACU in 2006. There is therefore sufficient data to give an indication of the likely resource available for a small underground mining operation. ACU now wants to undertake a scoping study of this deposit with a view to extending mining activity beyond the Thakadu open pit mine life.

Following the commencement of engineering design work by Amec Minproc, the plant has further been tested with higher throughput and management have identified a number of areas for improvement. The ore conveying system and wet section pumping capacity have been identified as one such area, as have the electrical and instrumentation systems. Enhancements have commenced to address these areas to place the plant on a better footing for higher capacity.

In order to fund these growth projects and the other plant enhancements, ACU has secured USD7.5 million from ZCI. Under the terms of the ZCI loan, the Company will receive USD7.5 million immediately, at an interest rate of 12% per annum payable half yearly, to be repaid on or before 30 November 2014 and may be renewed for a further 2 years, subject to ZCI giving its written consent to such renewal, prior to the repayment date. The terms and conditions are otherwise on the same terms as with the previous term loans from ZCI, including security provided, and bring total interest-bearing loans from ZCI to USD 41.5 million, excluding the Convertible Loan of USD7.9 million. ACU has drawn down USD2.5 million from this facility to ensure completion of the drilling at Matsitama before the onset of the rainy season, the commencement of the scoping study for an underground mine at Makala, the initial work for the exploration drilling programme at Mowana North and continuation of its plant enhancements.

As ZCI owns 82.16 per cent. of African Copper's total issued ordinary share capital at the date of this announcement and is providing financing to the Company, the ZCI Loan falls within the definition of a related party transaction under Rule 13 of the AIM Rules for Companies. The independent directors of the Company consider, having consulted with its nominated adviser Canaccord Genuity Limited ('Canaccord'), that the terms of the transactions are fair and reasonable insofar as its shareholders are concerned.

Commenting, Jordan Soko, Acting Chief Executive of African Copper Plc, said, "We are pleased with ZCI's commitment to assist ACU explore its growth projects and value adding activities that could potentially extend mining beyond the current life of mine as well as enhance current operations. We have sought to ensure that cash flow from Mowana production is reinvested in upgrading the physical infrastructure and production capacity and efficiency at Mowana."

Tom Kamwendo, Chairman of ZCI Limited added: "We regard African Copper as an attractive lending proposition and we are delighted to be able to help the company improve its operational efficiencies and knowledge of what could be an exciting addition to its resource base."

The technical information in this announcement has been reviewed and approved by David De'Ath, BSc (Hons), MSc, GDE-Mining, MIMM and MAusIMM, the Company's Manager -Geology, of the Mowana Mine for the purposes of the current Guidance Note for Mining, Oil and Gas Companies issued by the London Stock Exchange in June 2009.

For further information please visit www.africancopper.com.

Notes to Editors:

African Copper Plc is an AIM-listed copper producer and exploration company, currently focused on Botswana. The Company's flagship project is the copper producing open pit Mowana mine. ACU also owns the rights to the adjacent Thakadu-Makala deposit. Both deposits are situated on the highly prospective Matsitama belt, located close to Botswana's second largest city, Francistown, in the northeastern part of the country.

Contact Information

  • African Copper Plc
    Brad Kipp
    Chief Financial Officer
    +1 (416) 847 4866
    bradk@africancopper.com
    or
    Canaccord Genuity Limited (NOMAD and Broker)
    Andrew Chubb/Tarica Mpinga
    +44 (0) 20 7050 6500
    or
    Tavistock Communications (PR and IR)
    Simon Hudson/James Midmer
    +44 (0) 20 7920 3150