Alecto to acquire Botswana copper mine

Trading in Alecto Minerals’ shares has been suspended on its proposed reverse takeover of Cradle Arc Investments (Proprietary), a company incorporated in Botswana which owns the Mowana copper mine.

Alecto says the proposed transaction will be transformational. Alecto will acquire a 60% interest in Mowana, a former producing copper mine, and plant which can be brought back into production at a relatively low cost

Other highlights:

– An offtake financing agreement has been agreed by Cradle for US$20 million which will provide funding for investment in the mine and the plant in order to increase recoveries

– Mowana has a mineral resource inventory of 683,000 tonnes copper (“Cu”) in the Measured and Indicated categories (JORC-code compliant) with an additional 945,000 tonnes Cu in the Inferred category

– The mine was commissioned in 2008 at a cost of US$60 million. It operated successfully between 2008-2015 processing an average of 775,406 tonnes per annum (- of ore at an average grade of 1.72% copper. In FY13/14 Mowana produced 43,301 tonnes of concentrate, representing 9,724 tonnes of Cu

– Alecto and its partners in the Proposed Transaction have re-modelled the Mine to ensure that it can produce from a much lower cost base to generate profit even at depressed commodity prices. At a copper price of US$2.50 per lb, Alecto’s internal estimate for the project’s NPV is US$245 million

Chief executive Mark Jones said: “Mowana is a first class copper mining project and I am very excited about the prospect of bringing it into Alecto’s portfolio. The proposed acquisition of Mowana will be transformational for Alecto, turning the Group in to a producing miner and materially strengthening its balance sheet.

“I very much look forward to effectively completing our transformation from a greenfield exploration company into a multi-commodity metals producer in Africa in the coming months, and the team has conducted significant work to ensure that this is achievable.

“Our technical team has worked tirelessly to generate a robust business model that will target early cash flow from both the profitable mining of copper and the management of the operation. Additionally, our commercial team has secured commitments for funding, so that we can realise the maximum value from copper production and quickly initiate plant improvements at Mowana that are expected to deliver substantial production efficiencies. “The proposed Mowana acquisition represents an ideal opportunity to achieve a complete transformation of Alecto and we look forward to keeping investors abreast of our progress.”

At 9:30am: (LON:ALO) Alecto Minerals PLC share price was 0p at 0.07p

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