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Cradle Arc plays for time at Mowana as it seeks a sustainable funding solution

An application has been made to the Botswana High Court for Cradle Arc's 60% owned subsidiary, Leboam Holdings, to be placed into provisional liquidation as parallel talks on an alternative funding arrangement continue
Fujax has called on Leboam to vary the previously agreed, but not legally binding, terms of its loan facility

Cradle Arc PLC (LON:CRA) has applied to put its subsidiary Leboam Holdings into provisional liquidation.

Cradle Arc has a 60% stake in Leboam, which is the holding company of the Mowana copper mine in Botswana.

READ: Cradle Arc suspended as loan deal falls through

The decision follows the announcement earlier this month of an impasse in loan negotiations between Fujax Minerals and Leboam.

Cradle Arc has been notified that Fujax and Leboam's 40% shareholder have made a separate application to the Botswana High Court, to be heard today (18 December), for Leboam to be placed under judicial management or alternatively, to place it under provisional liquidation.

Cradle Arc’s application is to be heard tomorrow (19 December).

Cradle Arc is opposing the application for judicial management on the basis that Fujax has neither provided a viable alternative financing plan for Leboam, nor a credible business plan for the Mowana mine.

Cradle Arc said that although operations at the mine have been suspended, significant remedial action has been performed on the process plant, the water provision from its well-field and various other infrastructural elements of the mine. Rental agreements for mining equipment have been cancelled, and equipment removed from the site pending settlement of outstanding and overdue creditor balances.

"While it is unfortunate that we have had to take this step, provisional liquidation as opposed to final liquidation is by no means the end for Mowana, but rather provides the company with an opportunity to continue talks, along with the provisional liquidator, for a sustainable funding solution at the mine,” said Kevin van Wouw, the chief executive officer of Cradle Arc.

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