Modern Mining July 2015

feature COUNTRY FOCUS – BOTSWANA

Sedgman to earn into the Mahumo There are only two really significant players in Botswana’s Kalahari Copperbelt. One, of course, is US-based Cupric Canyon Capital, which is developing the Khoemacau underground copper mine (and which has reportedly also acquired the adjacent Boseto copper mine from the liquidators of Discovery Metals), and the other is ASX-listed MOD Resources (MOD), based in Perth, Western Australia. MOD owns the very promising Mahumo copper/silver project. In a significant step forward for Mahumo, MOD has announced that it has signed a binding Memorandum of Understanding (MoU) with Sedgman, which will see the latter company participating in the project.

I n terms of the MoU, Sedgman, which is listed on the ASX, will inject up to US$1,5 million into feasibility studies relating to Mahumo, including engineer- ing and management services, and – in return – will earn up to a 10 % interest in the project via a joint venture arrangement (the Mahumo JV). Sedgman is a provider of servic- es to the global mining industry and has ex- perience of working in Botswana, having been the designer and contractor for the processing plant at the Boseto mine. In its statement announcing the MoU, MOD says the agreement defines key terms for three additional documents which will require fur- ther negotiation and agreement by MOD and Sedgman. These documents are the Mahumo JV agreement, the Mineral Processing Plant (MPP) contract and the operations contract. Subject to agreement of operational and commercial terms and finalisation of these contracts, MOD will appoint Sedgman as the exclusive designer, constructor and operator of the MPP at the Mahumo project. Independent Metallurgical Operations (IMO), reputedly Australia’s largest metallur- gical consulting group, will be appointed as an independent reviewer to confirm to MOD’s satisfaction that the design and pricing of the MPP and the structure, pricing and KPIs for the operations contract are commercially competi- tive and appropriate for comparable operations in Southern Africa. Terms of the contract will be reviewed after an initial two-year period, then at three-year intervals. The Mahumo JV will also include a mecha- nism for Sedgman to invest in MOD equity up

to a defined limit at a defined discount to the share price at the time. Commenting on the agreement, MOD’s Managing Director, Julian Hanna, said the board considered the MoU with Sedgman an excellent outcome for the Mahumo project. “Sedgman has the capacity to bring substantial resources, expertise and in-country experience to assist the potential development of the proj- ect from feasibility, through to possible plant construction and operation. The US$1,5 mil- lion of services to be provided by Sedgman will also significantly reduce the amount of funding required by MOD to complete the proposed fea- sibility studies,” he said. “The structure of the proposed Mahumo Joint Venture will result in minimum dilution of MOD’s equity in the project. It should also allow the company to focus on its core strengths of expanding high grade resources at Mahumo

36  MODERN MINING  July 2015