Offtake agreement and project finance terms signal new life for Kombat
Staff Reporter Windhoek-Trigon Metals Inc. has along with its 80 percent owned subsidiary, Manila Investments, agreed terms with a major international trading house for copper concentrate offtake from the company’s Kombat Mine in the Otjozondjupa Region, as well as a financing facility to fund operations to restart activities to commence with open pit mining. Trigon and Manila have agreed offtake terms with a major international trading house to buy 100 percent of the annual production from the Kombat mine up to a total of 20,000 metric tonnes of contained copper. This represents the anticipated life of mine production from the open pit in the Kombat Central and East areas, based on the Mineral Resource estimate as recently reported in the National Instrument technical report, entitled ‘NI 43-101 Technical Report on the Kombat Copper Project, Namibia’, dated May 31, 2017. The Technical Report constitutes a preliminary economic assessment. The terms of the offtake are subject to various preceding conditions, including final due diligence and approvals from the trader. In conjunction with the offtake, the trader will provide a financing facility to Manila of up to US$7.7 million to refurbish the concentrator at the Kombat mine, to upgrade infrastructure and for working capital purposes to bring the Kombat open pit mine into production. Trigon will act as guarantor for the financing facility and security will include first ranking charges and security interest over all present and future property and assets of Manila. The terms of the financing facility are subject to various preceding conditions, including final due diligence and approvals from the trader. President and CEO of Trigon Stephan Theron said: “The financing and offtake arrangements represent a major milestone for Trigon and Manila in re-starting the Kombat mine. We are pleased to be partnering with a major international trader in this exciting venture, which should ensure that we can meet our 2018 production restart goals.” Trigon is concurrently progressing various work streams regarding its strategy to bring the Kombat Mine back into production and is targeting the commencement of open pit mining by mid-2018. The company does not have a current feasibility study and is not basing its decision to restart mining activities on any estimated mineral reserves or a feasibility study of the economic or technical feasibility of the Kombat project. Historically, projects that are re-commenced prior to the mining company completing a feasibility study have a much higher risk of economic or technical failure. Estimates regarding production levels, the development timetable and economic feasibility in respect to the Kombat mine are based on internal management forecasts and are thus inherently uncertain and subject to continued refinement. The company intends to initiate a feasibility study on the surface mining areas and a pre-feasibility design on the Asis Far West underground mine in November. The studies are anticipated to take six months to complete, during which period refurbishment of the mill and concentrator can commence to facilitate timelines for commencement of open pit mining and the processing of ore therefrom. On September 25, 2017, the company announced that it had received notification from the Minister of Environment and Tourism in Namibia that it had been awarded an Environmental Clearance Certificate for proposed exploration on the mining licences held by Manila. The clearance is valid for a period of three years from September 18. Local businessman Knowledge Katti, through his Havana Investments firm, acquired the mining town of Kombat from Manila in 2015. There have been conflicting reports on the amount involved in the sale. In October 2015 The Namibian reported that the sale of Kombat to Katti was worth N$50 million, but in November that year The Windhoek Observer, citing financial statements of the Canada-based firm Kombat Copper, reported that the town was sold to Katti for 1 Canadian dollar (N$10.53). The town was until recently owned by South African firm Grove Mining, which ran the local Kombat Mine. Grove Mining sold Kombat Mine to Manila Investments, in which Katti’s Havana Investments and State-owned Epangelo Mining each own 10 percent. Kombat Copper, a Canadian company, owns the remaining 80 percent. Kombat Copper had acquired the town from Grove Mining, but Katti’s Havana Investments has now acquired the town from the Canadian firm to all but put the town’s full ownership into the hands of the Namibian mining entrepreneur. Kombat is situated 37 kilometres east of Otavi on the B8 road to Grootfontein. In 2012, Manila Investments, a company co-owned by Katti, which is also the holder of the mining licence in the area, roped in Canadian partners Kombat Copper, to jointly mine at the town. The two companies, plus Epangelo Mining, set up Manila Investments, which now owns the mining operations at the town.
2017-11-02 10:06:14 10 months ago