Bushveld Minerals (LON:BMN) recently agreed to acquire the majority of a tin tailings dump that could be a catalyst for early production from its Mokopane project in South Africa. It is paying £559,470 for 87% of the Zaaiplaats tailings, estimated to contain between 2,600 and 4,500 tonnes of tin. Proactive Investors (PI) interviewed the firm's chief executive Fortune Mojapelo (FM) to find out more about the acqusition.
PI: Could you explain the rationale behind the acquisition and how it will contribute to Bushveld’s development?
FM: When we listed Bushveld, we always indicated that we were looking to use the Bushveld platform to build the critical mass of tin assets. We were also interested in ensuring that we have an early production profile in the portfolio.
We have been steadily building up our resource base. We've increased our resource from the initial 6,000 tonnes, which was on one target, to 18,447 tonnes of contained tin spread between the two deposits - the Zaaiplaats hard rock deposit and the Groenfontein deposit.
These two are part of a set of five targets that are in close proximity with each other in a single licence area that we're targeting. So that’s been the focus.
We have also indicated that we’ve acquired another project, where we added a potential 18,000 tonnes of tin resource. In terms of building the critical mass, we’re on our way.
The second part of that strategy is to establish an early production profile. What’s nice about the Zaaiplaats and the Groenfontein deposits is that they are open-pittable, a quarry type mining operation, which is simple enough.
The tailings are even more interesting because, obviously, you don’t have big mining costs. What you really just need is to put in place processing infrastructure subject, of course, to the metallurgy and the mineralogy test work coming out positive.
Why we’re interested in it, why we like it, is the fact that with these tin tailings we really can fast- track our project to get into production and therefore into cash flows and fulfil that important leg of tin strategy.
PI: Could you give us more details about the financing of the transaction?
FM: We only make payments once we’re satisfied with the outcomes of our technical due diligence work that is currently underway. We’ve already done some with some positive results.
Once we’re comfortable with the outcome, at the completion of our technical work within two months, only then would we look to make payments.
To make sure that, as a company, we are well funded and capable to fulfil our obligations, not only on this asset, but also in the development of our other assets, we went into an agreement with Darwin Strategic.
That agreement, I must clarify, it is not your standard equity finance facility lines of credit. It is an innovative structure where around 50 million shares is the number of shares that are subscribed for.
Over a period of 12 months, we will instruct Darwin to place those shares in the market and they will do that at market prices and therefore will feed into the existing liquidity of the company.
We like this structure because it’s a departure from the standard equity lines of credit facilities, which have, unfortunately, developed a bad name in the market.
For us, there is no opportunity for shorting the stock on Darwin’s part. The discretion in terms of when the shares are sold, the number of shares sold, is entirely ours. So, from that point of view, we’re protected from any downward pressures on our share price or any sense of an overhang.
We are well positioned to obviously benefit as our share price grows - to benefit from what are very healthy liquidity levels we’ve seen in our stock from about October last year.