Experts cautions on mining ventures
Mining experts have said the flocking of major international mining companies to buy shares or merger with others exploring various resources in the country is a positive development, but government needs to move with speed on signing the deals.
The sentiments follow Lotus Resources Limited expected scheme of arrangement deal with Botswana-based uranium mining firm, A-Cap Resources Limited. Lotus owns Kayelekera Uranium Mine in Karonga District.
According to a Lotus report released this week, the merger will create a leading Southern African-focused uranium player with significant scale.
The new firm is expected to combine the production-ready asset, Kayelekera Uranium Mine, with the future large-scale growth asset, Letlhakane Mine in Botswana, to create the third largest resource-base of Australian Stock Exchange (ASX)-listed uranium developers.
The report quotes Lotus Resources Limited managing director Keith Bowes as saying the combining of the uranium assets of Lotus and A-Cap creates a dedicated African uranium vehicle that meets the needs of the growing uranium market.
He said: “Lotus’s resource base will increase almost five-fold while A-Cap shareholders will gain exposure to a production ready asset in Kayelekera.
“The shareholders of both groups will share in the benefits of a long-term development project complementing Kayelekera’s shorter term uranium production profile.”
On his part, A-Cap energy deputy chairmperson Paul Ingram is quoted saying, the merger provides immediate value realisation at a premium.
“Becoming a part of a larger group significantly reduces development, funding and execution risk,” he said.
The deal comes after Rio Tinto Mining and Exploration, an Anglo-Australian company also announced last month that it is investing 40.4 million Australian dollars (about K29 billion) in Sovereign Metals Limited which is exploring the Kasiya Rutile Mine in Lilongwe.
The Rio Tinto deal will result in an initial 15 percent shareholding in the rutile mine. While Lindian Resources Limited is also stepping up efforts to complete the takeover of Kangankunde Rare Earth Mine in Balaka where it has already injected $20 million about K22 billion out of the expected $30 million (K32 billion).
In an interview yesterday, geologist Grain Malunga said mining requires a lot of investment; hence, companies coming into Malawi for the mergers are bringing the much-required capital that can help kick start full-scale mining and production.
He said: “The companies initially involved in Malawi were smaller, but there are major companies out there that do the mining and inject a lot of capital, such as Rio Tinto.”
However, Malunga said government must improve the business environment to attract more investors in the extractive sector.
Parliamentary Natural Resources Committee chairperson Welani Chilenga yesterday said he hoped for more investors to join the mining sector, mining could be a game-changer for the country’s fragile economy.
He said, however, problems resulting in delays to conclude mining development agreements must be sorted out for Malawi to benefit fully from mining.
“Companies are ready to roll out and by this time government should have allowed them to start setting up so that Malawi benefits from uranium prices which are picking up.”
