Namibia – EBM Mining Namibia will also commence and manage the refurbishment of the mine infrastructure and production facilities in time for initial production at the Kombat mine, which is expected before the end of this year.
As per the definitive agreement, EBM will commence operations in the Kombat East and Kombat Central areas of the Kombat mine for a three year term. EBM will also focus on the lead enriched Gross Otavi Deposit located 12 km to the west of Kombat, while the company’s core areas of Kombat West, Asis West and Asis Far West are excluded.
EBM has committed to making an investment to refurbish certain necessary components and infrastructure, which will benefit Kombat Copper in the future. Meanwhile, Kombat Copper will have the right to acquire all the installed components and infrastructure at the end of the three year contract for a nominal fee of N$1 (Namibian dollars) and does not have to invest any capital up front.
The agreement also states that profits will be split equally between Kombat Copper and EBM. Kombat Copper has agreed to reimburse up to 50% of EBM’s capital investment from 50% of its profit share. Further, EBM will pay operating costs directly, while Kombat Copper, to remain in control, will collect the proceeds from the sale of materials and then pay EBM its contracting fee.
Kombat Copper will earn a N$150 000, or CA$15 000, monthly retainer to cover its monthly Namibian carrying costs.
The agreement outlines that Kombat Copper also has the right to re-start mining in other areas of the mine and use its infrastructure before the three year contract expires. [quote]
Meanwhile, EBM has agreed to assume security costs for the site and the management of all environmental compliance associated with re-starting mining operations. EBM will also source local skilled and non-skilled labour and will utilise local suppliers and contractors, whenever possible, from the Kombat region. In its role as contractor, EBM will be managing the hiring process to support operations.
The company anticipates a steady flow of non-dilutive cash flow to become available towards the end of 2016 from the mining operations. The free cash flow will be used to:
- Focus on expanding the resource base for the western mine area, outside of the EBM contractual agreement area by funding an exploratory drilling programme;
- Complete pre-feasibility and other studies as necessary to re-start Kombat Copper’s core asset; and
- Commence consolidation in the district and/or acquire additional land along the Kombat trend.
“We are extremely pleased to have finalised this landmark agreement with EBM Mining Namibia. Kombat will now be able to realize on its goal of restarting operations at the Kombat mine with an experienced and respected contractor,” says Kombat Copper president and CEO Paul Bozoki.
“This relationship is expected to not only support the company with a steady stream of cash, but it is also a great win for the local economy as we anticipate an increase in trade with our local merchants in the town and surrounding areas.
“Kombat will now be able to focus on our core copper assets for future production sources while also financing the refurbishment of our infrastructure and operations in a non-dilutive way for our shareholders.”