Discovery Metals will place the Boseto copper mine in Namibia on care and maintenance in the next six months in response to the weak outlook for copper prices and high stripping costs at the mine.
The Sydney-listed junior copper miner has struggled to run Boseto at a profit since bringing the mine into production in 2012, and the economic viability of the project has been further dented by the copper price’s slump to four-year lows.
After a review of market conditions and mine operating costs, the Discovery board voted to halt open-pit mining and processing operations by mid-2015, the company told investors on Friday December 19.
“The review concluded that the current outlook for copper pricing on world commodity markets is expected to remain soft in the short to medium term (and hence a recovery in the profitability of the Boseto open pit operations is unlikely in the near future),” the company announced.
Before the site is mothballed, the company will mine the existing pits at Boseto with a focus on cost control and revenue maximisation, and at the end of that process it expects to be able to finance the care and maintenance of the mine, and pay back its short-term creditors, Discovery said.
The company is still in exclusive talks with Cupric Canyon Capital over the potential sale of the Boseto mine, but Discovery will move ahead with the care and maintenance campaign with immediate effect, irrespective of the outcome of those negotiations.
It expects to update investors about the potential sale in January. If the transaction does not proceed, Discovery will open up discussions with other potential buyers, the company announced.
The company’s largest shareholder is Transamine Trading, the Switzerland-based raw materials trading house, which owns a 13% stake in the company. Blumont Copper, which is the second-largest shareholder, owns a 10% stake.
Mark Burton
mburton@metalbulletin.com
Twitter: @mburtonmb
