Berkeley Mineral Resources finally get Kabwe approval

Back on 20th June, Zambian focused tailings miner Berkeley Mineral Resources (BMR) which is listed on AIM got investors really excited when it announced that “its 100% owned Zambian subsidiary, Enviro Processing Ltd (“EPL”), has today learnt via the Zambian press that approval for the processing operations at Kabwe has been granted.” The shares spiked, then 4 days later they fell as much as 40% when the following RNS was released, “further to the announcement on Friday 20th June regarding the approval announced by the Zambian Environmental Management Agency (“ZEMA”) concerning BMR’s Kabwe operations, BMR understands that it has today been announced that the decision has been deferred by ZEMA pending the conclusion of final consultation with key stakeholders”. Oh dear! One minute Kabwe is on, then its off!

Today BMR finally got the long awaited Kabwe approval giving it permission to start processing mining tailings, a relief for Chairman Masoud Alikhani after many delays and false dawns which have tested the patience of shareholders. The approval is around 2 years late.

“the Zambia Environmental Management Agency (“ZEMA”) has issued a written approval of the Environmental Impact Statement (“EIS”) submitted by EPL for lead-zinc recovery and copper processing at Kabwe. ZEMA’s approval of the EIS is based on its review of the EIS, on EPL’s environmental base line studies and information provided by EPL, on written and verbal comments from interested and affected parties and on its own site verification findings. The approval is subject to normal conditions relating to monitoring of protection for such matters as water and air quality, noise levels, dust suppression and employee health. It is also subject to EPL implementing the project within three years.

ZEMA first notified EPL of the requirement for an EIS in September 2013. For lead and zinc, the phase one processing, detailed in the Company’s Definitive Feasibility Study, is anticipated to be by gravity and magnetic separation. For copper production, EPL’s plans are for a cementation process to produce concentrates from ores to be secured from Zambia and the DRC via EPL’s trading connections. BMR now intends to carry out final metallurgical studies to determine the optimal process route for treating the lead and zinc tailings so that pilot production can commence as soon as possible. In the meantime, EPL will commence small scale processing of copper ore secured locally.”

Kabwe (formerly known as Broken Hill) is located 130 km north of Lusaka, the capital of Zambia. The Kabwe mine was discovered during 1902 and commenced operations in 1904, reaching full-scale production in 1906. It officially closed down on 3 June 1994 due to its operations becoming uneconomic at that time. The site was placed under care and maintenance by the national mining company The Zambian Consolidated Copper Mines (“ZCCM”). For 88 years of continuous operation until final closure in 1995, Kabwe was regarded as one of the famous mines in Africa and held a key position of national economic importance. During its life time the mine produced the following: Zinc (Zn) 1,800,000 tons, Lead (Pb) 800,000 tons, Vanadium Oxide (V2O) 7,816 tons, Silver (Ag) 80,000kg, Cadmium (Cd) 235,000kg.

The above-ground Dumps of mineral-rich tailings, slag and waste left onsite during the mining years are still in place.In recent years, the ownership of the Kabwe complex has been rationalised and since 2008 has been steadily acquired by BMR which now owns all the surface rights overs the 705 hectares at the site.

The formal resource estimate for the wash plant dumps section of the Kabwe tailings are 61,147 tonnes of zinc at an average grade of 10.66% and 41,345 tonnes of lead at 7.21%, while the leaching plant section resource is put at 102,690 tonnes of zinc at 3.88% and 230,810 tonnes of lead at 8.71%. Current estimates for the value of the whole project are around $1.35 billion.

The pilot  production and offtake agreements now remain key. After moving up over 14% in early trading, the shares now remain stubbornly below 2p, at 1.9p, a 7% rise. This is partly explained by the placing with Novum Securities, “Under the Placing Agreement with Novum Securities Limited, £1,000,000 was to be raised in two tranches by the issuance of 71,428,570 Ordinary Shares of 1 pence in the capital of the Company at a price of 1.4 pence per share. The First Tranche of 35,714,285 shares was issued on 8 July 2014 raising £500,000 before expenses. The second tranche of 35,714,285 shares is due to be subscribed following announcement of the approval of EPL’s Environmental Impact Assessment relating to planned operations at Kabwe. BMR expects this approval to be granted by no later than 31 August 2014.”

Good news for BMR shareholders but plenty for the company to prove given its chequered history.

Contrarian Investor UK

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