As part of the admission process, the company has raised, in aggregate, £5.65 million before expenses, comprising £3.25 million in pre-IPO funding, via the issue of the October 2017 convertible loan notes, which automatically converted into ordinary shares on admission, and a further £2.4 million on admission, through a placing of 24,000,000 new ordinary shares at a placing price of 10 pence per ordinary share.
Following admission, Cradle Arc has a total of 201,329,482 ordinary shares in issue, implying a market capitalisation of approximately £20.1 million (approximately US$28.1 million) at the placing price.
According to Cradle Arc, Mowana mine has strong value fundamentals, with a current base case NPV of US$87 million, which is projected to increase to up to US$245 million following certain planned plant upgrades.
Mowana also has significant potential future upside from the development of the exploration areas that fall outside of the current base case mine plan and the potential development of the Makala underground mine.
In addition to its cornerstone copper producing asset in Botswana, Cradle Arc also owns the development ready Matala gold asset in Zambia with a JORC resource estimate of 568 000 oz at 2.7 g/t gold.
In Q1 2018, the company intends to make an offer at the placing price to those shareholders who were on its register as at the close of business on 21 December 2016 (being the date when the company’s shares were suspended from trading on AIM, following the announcement of the proposed acquisition of Mowana) and who continue to hold their ordinary shares immediately prior to such offer, to raise up to £500 000 gross.
Mowana copper mine
Mowana was acquired on attractive terms via a transaction originally agreed in December 2016, when the copper price was approximately US$2.5/lb (approximately $5 512/t), since when the copper price has increased by approximately 25% to circa US$3.1/lb (approximately US$6 897/t), 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 which have now been addressed through a revised mine plan.
Production was restarted in March 2017 and the company is currently ramping up to the base case nameplate production rate of approximately 12 000 tpa of copper in concentrate.
There is also a 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.
“The central pillar of our portfolio is Mowana, an established copper mine in Botswana. Our plans to expand and optimise 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 US$245 million,” says Kevin van Wouw, CEO of Cradle Arc.
“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.”