As part of the admission process, the gold and copper mining company raised, in aggregate, £5.65 million before expenses, comprising £3.25 million in pre-IPO funding.
This was done through the issue of the October 2017 convertible loan notes, which will automatically converted shares on admission, and a further £2.4 million on admission, through a placing of 24 000 000 new shares at a placing price of 10 pence per share.
Cradle Arc will have a total of 201 329 482 shares in issue, implying a market capitalization of approximately £20.1 million at the placing price.
Mowana copper mine (Cradle Arc, 60%)
Mowana acquired on attractive terms via a transaction originally agreed in December 2016, when the copper price was approximately US$2.5/lb, since when the copper price has increased by approximately 25% to circa $3.1/lb (approximately $6,897/ton), making the investment even more compelling.
Over $170 million of capital historically invested by previous operators at Mowana, which was in production between 2008 and 2015 before ceasing operations at a time of low copper prices and following operating challenges now addressed through a revised mine plan.
Production restarted in March 2017 and Cradle Arc is currently ramping up to the base case nameplate production rate of approximately 12 000 tpa of copper in concentrate:
- Processing at a throughput rate of 1.2 Mtpa, mining at a grade of 1.16% Cu
- Average all-in cash costs of approximately $4 400 per ton of saleable copper
- Base case NPV of $87 million
Low capex expansion option to increase production at Mowana to approximately 22 000 tpa of copper in concentrate through the installation of a Dense Media Separation (DMS) pre-concentration process:
- DMS is expected to increase throughput to approximately 2.6 Mtpa with reduced cash costs
- Increased NPV of up to US$245 million
“The central pillar of our portfolio is Mowana, an established copper mine in Botswana, which is currently in production and ramping up to approximately 12 000 tpa of saleable copper per annum, at an all in cash cost of $4,400/t versus a current copper price of $6,897/t, clearly highlighting the already robust economics of the mine,” states Cradle Arc CEO, Kevin van Wouw.
“Our plans to expand and optimize Mowana, primarily through the implementation of a DMS pre-concentration process, considerably improve the economics of this asset and can potentially raise the total project NPV significantly, to $245 million.
“In addition to the producing Mowana mine, there is significant additional upside potential from the exploration opportunities open to us in the region and exciting opportunities across our wider portfolio,” continues van Wouw.
“Our strategy is centered on applying new mining models and techniques, to achieve cash positive production from proven mining assets, having secured JV partnerships for our Mali assets, to maximize value in the near term for our shareholders.
“This strategy has been presented to potential investors and I am delighted to report that the appetite for this model has been significant and we have now added several well-known institutional holders to our register,” concludes van Wouw.
Feature image credit: Wikipedia