DML gets P914 boost

DML gets P914 boost


Discovery Metals Limited Company has announce that it has reached an agreement with Montsant Partners LLC (Montsant Partners LLC), an LLC Special Purpose Vehicle set up by a group of resource focused investment funds, for the recapitalisation of the Company to the amount of US$105 million (approximately BWP914 million).

The funds will be used in different areas like repaying existing debts.

US$65 million will be used to repay existing debt facilities in full; and US$40 million for working capital purposes, including advancement of the Zeta underground mine.

In a Press Statement, DML Botswana Country Manager Mokwena Morulane said that the transaction is subject to shareholder approval and a satisfactory legal due diligence to be undertaken by Montsant Partners LLC.

He said that the Company’s Lenders have agreed to repayment in full of existing Project Finance Facility and Revolving Credit Facility in exchange for payment of US$65 million (BWP566 million) and the issue of 500 million fully paid ordinary shares in the Company.

“The Company also intends to make a pro-rata entitlement offer to existing shareholders.”

He added that they will have access to additional funds of US$40 million (BWP348 million) for working capital purposes and to progress the Zeta underground mine.

“The development of the Zeta underground mine is of paramount importance to the Company as it will expose the sulphides zone in the ore body, resulting in better grades, and hence better returns.”

Morulane also mentioned that they are already in receipt of the environmental permitting for the Zeta undergrounds mine; and are currently awaiting ministerial approval for underground mining to commence.

Ministerial approval is expected in April 2014.

The Chief Executive Officer of DML, Bob Fulker had this to say in relation to the recapitalisation proposal, “this investment is an important element to ensuring the survival of the Boseto operation, and enables the Company to reduce its reliance on the currently loss-making open cut operations.

The Company will need to continue its focus on cost reduction while the new investment can be applied to the underground development, particularly in view of presently soft copper prices.”

He said that the transaction demonstrates the value that Montsant Partners LLC places in the Boseto operations and the DML Group, and it will therefore be critical that DML maximises the value from the investment to ensure the long term future of the Boseto operations.

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