end game looms

End-game looms in Boseto wrangle
MBONGENI MGUNI
STAFF WRITER

The eight-month wrangle for control of the 36,000 tonnes per annum Boseto Copper Project inched towards its end-game on Tuesday, with Discovery Metals announcing that change of control discussions had started with external parties.

The Australian firm, which commissioned Boseto last year after a seven-year effort, has been the subject of a hostile takeover by Chinese shareholder, Cathay Fortune Corporation (CFC), since last October.During the tussle for control, Discovery's share price dropped 85 percent on the Botswana Stock Exchange and by equally significant levels on its primary Australian Stock Exchange listing.Late last month, the Australian firm put itself up for sale after failing to win CFC's support for a plan to raise up to $245 million (P2.01 billion). The Chinese firm, founded by billionaire Yu Yong, currently holds 13.7 percent equity in Discovery and has tabled several offers for dominant control since October.
Last month, Discovery Metals announced it had signed confidentiality agreements "with a number of parties to date" and that it would be accepting binding proposals until June 10. The firm said it had opened its books to several bidders, including erstwhile suitor CFC."The board wishes to inform shareholders that Discovery Metals is in discussions with interested parties in relation to a potential transaction," the firm said in a statement on Tuesday."The board will update the market of material developments in due course. There can be no assurance that a transaction will occur."While the statement was mum on whether CFC was among the "interested parties", the Chinese firm recently tabled a new offer of between 35 and 40 Australian cents a share (P2.90 to P3.30), being significantly lower than the initial takeover offer of 1.70 Australian Dollars (P14.00) a share offered last October.Meanwhile, Discovery Metals on Wednesday revealed record metal production of 1,713 tonnes of copper and 75,348 ounces of silver from Boseto in May. The firm announced that overall copper and silver recoveries were measured at 84 and 91 percent respectively, while also noting record material movement of 3.24 million tonnes from the two operating open pits.
"Concentrate production in May was 4,112 tonnes at 41.7 percent copper and 570g per tonne of silver containing 1,713 tonnes of copper and 75,348 ounces of silver," the junior miner said."This was the highest monthly metal production figure from the Boseto Copper Project to date and was in line with the plan for the month."Discovery Metals has prospecting licences covering 11,872 km2 along the Kalahari Copperbelt. In an effort to protect future revenues from commodity prices fluctuations, Discovery hedged approximately 47 percent of copper and 65 percent of silver providing downside price protection on a portion of the Boseto production as at December 31, 2012.Approximately 53 percent of the copper production will be sold at spot market prices, while the total hedged quantities are 37,521 tonnes of copper and 1,620,939 ounces of silver.