Motheo Copper Mine to add over P700 million/ per annum to Government coffers

Mother Copper Mine, developed by Sandfire Resources, in Ghanzi district will inject over P700 million per annum in royalties and taxes to the government coffers once operational.

Speaking at the Botswana Resources Infrastructure Energy Forum (BRIEF) held on the 16th and 17th of May in Gaborone, Country Head, Dale Burgess said, in addition to over P700 million per annum in royalties and taxes to the government of Botswana, the company will create 650 jobs once operational.

Sandfire’s Motheo Copper Mine is centred on development of the T3 Deposit. The T3 Deposit is a significant sediment-hosted copper and silver deposit, located in the Kalahari Copper Belt in Botswana.

The project is held through in-country subsidiary Tshukudu Metals Botswana (Pty) Ltd and was acquired through Sandfire’s acquisition of MOD Resources Ltd in October 2019.

Motheo represents the foundation for Sandfire’s long-term growth plans in Botswana and currently supports over 1,000 jobs during construction.

The company’s vision is that Motheo will form the centre of a new, long-life copper production hub in the central portion of the world-class Kalahari Copper Belt, it holds an extensive groundholding spanning Botswana and Namibia.

Sandfire completed a positive Definitive Feasibility Study (DFS) in December 2020 on an initial Base Case 3.2Mtpa processing capacity and open pit development of the T3 Deposit.

Based on the results of the DFS, Sandfire’s Board approved the mine development, with construction commencing in 2021 and first production scheduled for the calendar year of 2023.

The DFS outlined a robust initial 12.5-year operation, underpinned by an updated Ore Reserve of 39.9Mt at 0.9% Cu and 12.2g/t Ag for 360,000t of contained copper and 15.6Moz of contained silver, producing on average ~30kt of contained copper and 1.2Moz of contained silver per annum over the first 10 years of operations, with relatively low capital intensity and robust operating margins.

The DFS was based on a forecast copper price of US$3.16/lb, reflecting long-term consensus pricing at the time the feasibility study was completed. Since the completion of the study, the average long-term broker price forecast for copper has increased to US$3.43/lb and the current spot price for copper is around US$4.30/lb.

As part of the Motheo Mine development, Sandfire has made a significant investment in additional processing capacity and infrastructure, providing a clear pathway to rapidly expand the processing facility to a planned 5.2Mtpa production rate for the Motheo Production Hub to accommodate other ore sources.

Burgess said the mine will have significant impact in Ghanzi district through creation of economic value chain activities. Unemployment in the area is estimated to be at about 25 percent.

“Mine wants to be a responsible corporate citizen, responsible stakeholder within the community, particularly Gantsi. We want to be the employer of choice. We want to look after the people and the environment, the rest will take care of itself,” said Burgess.

With copper prices having bounced back recently, Burgess has indicated, thought it is the nature of commodity prices to fluctuate, the company has a bankable definitive feasibility study which has proven the economics of the mine.

“Over the journey, the mine makes significant profit. Once we start producing copper concentrates and export it, we receive revenue, and the mine will start making money and payback its debt facilities,” he said.

“We are looking at June 2023, and the mine will be cash positive from the very beginning. We have 12 years and half years in reserve. We are spending US$20 million in exploration this year. The jurisdiction could expand to 40 years of mining copper,” Burgess said.  

Burgess is happy with the progress so far, indicating that the mine is on track, on schedule and on budget, and that it has a great workforce and competent team.

First production scheduled from the June 2023 Quarter, with the company intending to fund the development of the Motheo Copper Mine through a combination of cash and project debt.

Sandfire Resources Credit committee has approved debt financing of US$160 million for the Base Case 3.2Mtpa development. The company have since shortlisted potential international lenders. Selection of syndicate banks and finalisation of terms will be completed in the coming weeks.

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