Sandfire Resources, an Australia Stock Exchange-listed group, has approved the construction of a $259 million (P2.9 billion) copper mine 80 kilometres from Gantsi, the latest such development on the Kalahari Copperbelt.
The 1,000-kilometre belt running south-west to the north-east is known to contain millions of tonnes of copper and silver resources, but its heavy sands and lack of grid electricity have kept development at bay over the decades. Boseto Mine, the first major development attempted on the Kalahari Copperbelt, folded in 2015, but Khoemacau Copper Mining is on track to establishing a $565 million operation by next year, producing 60,000 tonnes per annum. This week, Sandfire MD and CEO, Karl Simich told investors the group had committed to developing a 30,000 tonne per annum operation on its Motheo resource, adjacent to Khoemacau.
“This is an exciting step for our shareholders, employees and contractors, strategic partners and other key stakeholders and, of course, for the communities in the Gantsi region where we operate and the nation of Botswana,” he said.
“Today we have given the green light to the development of a new, long-life copper operation based on the T3 open pit, which we envisage will become the core of our Motheo Production Hub – a new copper production hub in the central portion of the world-class Kalahari Copperbelt, where we have a dominant 26,645km2 ground-holding in Botswana and Namibia.”
According to Sandfire, the new open-pit mine will be based on 3.2 million tonnes per annum of processing, with immediate plans to ramp this up to 5.2 million tonnes by tapping into a neighbouring deposit. The mine will be located 15 kilometres from the main highway and 14 kilometres from the electricity grid, although a 10 to 15MW solar plant is also being considered as a back-up power source. Affordable power is critical for both Sandfire and Khoemacau, as Boseto’s woes can be traced back to high diesel generation costs, which choked operations when the copper price fell as grid power was unavailable at the time.
Sandfire executives estimate that during its 12 and a half year lifespan, and based on a copper price of $3.16 per pound, the new mine will generate $987 million (P11 billion) in core earnings. The Australian company is self-funding the capital costs as it held significant current cash holdings of $304 million (P3.3 billion) as at end of September 2020, with no corporate debt outside of lease liabilities.
“However, with the finalisation of the Definitive Feasibility Study, Sandfire is progressing consideration of a project financing facility for around 50% of the estimated development costs and working capital requirements, of around $150 million, as part of its broader capital management strategy.
“Further details will be provided in due course,” directors stated.
Sandfire is eyeing copper exports through Walvis Bay, Namibia, a distance of 1,000 kilometres west by road, where the base metal will be loaded onto shipping containers and sold into the “robust, deep and mature global concentrate market”. Sandfire executives said they already had a strong customer base built through eight years of production and trading from the group’s other mine, DeGrussa, located in Western Australia.
During construction, the new mine will employ up to 1,000 people and during operation, 600, with a target of 95% citizen recruitment. Sandfire has already engaged a contractor for the new mine, who will also be charged with local training and up-skilling programmes to build knowledge and capability.
“This is, in effect, the dawn of a new global copper province – as evidenced by the scale of the new underground mining operation currently being constructed immediately to the north-east of our project by Cupric Canyon Capital at their Khoemacau Project,” Simich said.