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Discovery Metals built Boseto Mine at a cost of $175 million and Cupric Canyon bought it for $35 million. Workers put in their sweat and tears and were driven out in buses.

With scores in attendance under white tents pitched on dusty sands on September 7, 2012, President Ian Khama officially launched the first of many mines on Botswana’s section of the 800-kilometre-long Kalahari Copperbelt.

“I wish to commend Discovery Metals that amidst the global economic ills, you forged ahead without wavering. You remained firmly focused to deliver the mine which employs about 500 people, 96 percent being citizens,” Khama told the motley audience of business suits and geologists’ khakis.

The event, held to mark the official commissioning of Boseto Copper Mine, was historic for several reasons. Firstly, it marked the first time the resources of the Kalahari Copperbelt in Botswana were commercially exploited.

That the areas around the western regions encompassing Ngamiland and North West districts, have been known to be rich in copper and silver since the early 1970s.

According to MOD Resources, a Perth-based copper developer also on the Kalahari Copperbelt, the first documented reconnaissance and grassroots exploration of the area was done in the early 1960s.

“Since then, the area has been subject to extensive exploration on nearby property. This has included thousands of metres of drilling, airborne and ground geophysical surveys, soil geochemistry and preliminary metallurgical investigations,” MOD Resources researchers note on their website.


According to a report by globally renowned geologist, Tom Eadie, geological prospecting within the area later held by Discovery Metals began in 1962. In 1970 Anglo-Vaal located quartz veins rich in copper, silver and lead in the area of Northern Ghanziland before US Steel International Inc. took over exploration work in 1971 and in 1978 produced a detailed report on the discovery of copper-silver mineralisation at Ngwako Pan.

Anglo American got in on the act in the mid-1980s until 1993, completing soil sampling, electromagnetic geophysical surveys (both ground and airborne), a significant amount of drilling and metallurgical test work on the copper ore.

Even with the tomes of available geological data on the Kalahari Copperbelt, it was not until Discovery Metal’s arrival on the scene in 2005 that exploitation began.

Prior to this, the vagaries of capital, market prices and investor interest had stymied commercial development of the Copperbelt, with more focus on minerals such as diamonds and coal.

Discovery Metals’ arrival in Botswana dates back to transactions concluded between mining powerhouses in Australia in early 2003. According to available research, Discovery Metals was initially known as Discovery Nickel, a company born May 2003 when AIM Resources Limited divested its Australian nickel interests into the new firm.

The divestment was backed by exploration titan, Falconbridge Australia, which committed to not only ceding certain prospecting licences in that country, but also put its full technical weight to count.

Falconbridge has a rich history in Botswana, where it has been involved in several landmark mineral discoveries as well as milestones, including a processing agreement for BCL Mine, the country’s first copper mine.

Falconbridge also ranks among pioneering mineral explorers in Botswana and was key in discovering the kimberlite pipe under 70 metres of sand in central Botswana. Gem Diamonds is presently tapping into that discovery via Ghaghoo Diamonds and held an inaugural tender of 10,167 carats in February 2015, securing an average price of $210 per carat.

Backed by the robust explorer, Discovery Nickel made its debut outside Australia on July 1, 2004, announcing that it had secured an 80 percent interest in four nickel prospecting licences in northeastern Botswana.


On October 4, 2005, Discovery Nickel – then led by Jeremy Read – announced that its “strategy of focusing on base metal resource opportunities in Botswana”, had reaped dividends in the form of successfully securing seven prospecting licences covering 6,333 square kilometres.

Known as the Maun Copper Project, the area was the subject of intense bidding among explorers, according to Read.

“Several other companies recognised the potential of the Maun Copper Project and competed for the tenements, but I am delighted to say that Discovery Nickel won through,” he told shareholders in an announcement.

“Being able to add the Maun Copper Project to our existing portfolio of nickel projects is another positive result to come from our strategy of focusing on base metal resource opportunities in Botswana.”

The awarding of the prospecting licences marked one of the earliest examples of the Department of Geological Survey’s competitive bidding process for mineral rights. Today, the same ‘auction’ system is used for diamonds and coal, particularly where a wealth of data from previous exploration is available.

For Discovery Nickel, the planning for Boseto took place at a time when copper prices were soaring, with the base metal first breaking through the $4.00 per pound barrier in 2006.

Australian Securities Exchange investors - where Discovery Nickel listed in 2004 – were merrily on board, fuelled by rising copper prices and early encouraging results from the drilling at the Maun project.

In June 2006, Discovery Nickel issued its first official resource estimate for the Maun project, indicating an inferred mineral resource of 20 million tonnes of copper at a cut off grade of 0.6 percent.

Discovery Nickel listed on the Botswana Stock Exchange as Discovery Metals’ Limited on December 8, 2006 with Read saying the move would open up access for local investors.

“We are very pleased to have completed our successful listing on the Botswana Stock Exchange and we look forward to developing a significant shareholder base in Botswana based upon ongoing success on both the Maun Copper and the nickel projects,” Read said.

The Boseto Copper Project was fast becoming a reality and with the listing, investors in Botswana had been given access to a mineral wealth success story on their own shores.


A study released in July 2007 by mining consultants Snowden, showed that the Boseto Copper Project had the potential to be economically viable at copper prices of $1.50/lb and above.

“The current copper price is $3.58/lb and is forecast to remain significantly above $1.50/lb for the next several years, which has the potential to further increase the value of the project,” Discovery Metals announced, saying it was moving to a prefeasibility study.

“The Snowden study considered a range of different mining scenarios, which showed that for copper prices of $2.00/lb the range of potential project net present values was $60 million to $120 million and that range increases from $120 million to $210 million for copper prices of $2.50/lb.”

However, the pace of developments at Boseto took a massive knock in the third quarter of 2008, when the financial crunch came to bear on local mining developments.

Where Discovery Metals could previously use the robust copper price and its illustrious confirmed mineral resources to fundraise, the credit crunch meant investors paid greater scrutiny to where they put their money and in general were risk averse.

Copper in particular, being a metal who’s price is directly linked to global growth, took a beating and by December 2008, had collapsed to $1.4 per pound, or below the Snowden study’s break even point. The projection that copper would “remain significantly above $1.50/lb for the next several years”, had been incorrect and the impact was visible on Discovery Metals’ share price.

Copper prices did firm between 2009 and 2010 running counter to the global economy – due partly to world governments’ efforts to prop up their economies – with the brown metal reaching an all time high of $4.41 per ounce in December 2011.

However, prices weakened from that point forward and the debt and momentum gathered at Boseto meant its developers ploughed ahead towards commissioning despite unfavourable conditions.

Upgrades to the mineral resource (up to 45 million tonnes), a favourable Bankable Feasibility Study showing “significantly lower operating costs” and improved project economics as at December 2008, all helped project momentum.

In addition, in June 2008, the Government of Botswana had granted Discovery Metals an additional seven prospecting licences making the company the largest landholder on the Kalahari Copperbelt with 10,100 square kilometres.


However, throughout 2009, there were signs of unease in the project, with several high-ranking shareholders such as Bank of America reducing their portfolios in Discovery Metals.

Discovery Metals pressed on, securing an offtake agreement and an Engineering, Procurement and Construction contractor and approval of its Environmental Impact Assessment all in 2010.

On September 2, 2010, Discovery Metals gave its EPC contractor, Sedgman, the greenlight to go ahead with construction, based on cash reserves of $33 million at the end of August 2010.

“Final Botswana government approvals, licences, debt and equity funding of the Boseto Project,” new MD, Brad Sampson told investors.

Up to this point, Discovery Metals’ technocrats said the numbers still balanced and the project would be viable. All eyes were fixed on the start of commercial production, the grades to be produced and the copper prices prevailing at that point.

In 2012, a fresh downturn in the copper price brought pressure on Discovery Metals and resulted in a flood of takeover offers, which were all rejected.


One such suitor, Cathay Fortune told Discovery Metals’ shareholders that the risks to the Boseto project could be summarised as: single mine risk, commissioning risk, operational and technical risk, exploration risk and commodity price risk.

“There is a risk that the cash costs for the Boseto project will be significantly higher than as previously disclosed by Discovery. Discovery has not updated its estimate of projected cash costs for the open cut operation since 2010 and there has been significant inflation in African mining costs in the last two years.

“Discovery has only provided incomplete and limited information in relation to the cash costs of the open cut operation for production to date and has not released updated cash cost guidance since 2010,” Cathay Fortune said in a letter sent directly to shareholders on November 8, 2012.

“You forged ahead without wavering, amidst global ills.” Khama’s words at the commissioning earlier that year must have sounded portentous to Discovery Metals shareholders towards the end of 2012.

By the time Khama officially launched the mine in September, the company’s shares in Australia were valued at 1.66 Australian Dollars, its market capitalisation was AU$807 million (P6.4 billion) and its cash holdings were $86 million.

By the time of the half-year financials in 2013 – the first year of full production – Discovery’s share price had fallen to 74 Australian cents, its market capitalisation was AU$360 million (P2.83 billion) and its cash holdings were $37 million.

The last report the company filed before closing in February 2015 Boseto shows cash holdings of $3.1 million while the share price of 15 Australian cents is from February 27 when a trading halt was effected ahead of the suspension of operations.


From the time Boseto commenced commercial production, higher than projected operating costs set against lower than expected copper prices kept the pressure up on the fledgling mine. While the company resisted several more takeover attempts, it slowly began to open up to suitors and narrowly missed a deal in November 2014 with Cupric Canyon, the Barclays Natural Resources-backed copper junior. By December 2014, the troubles at Boseto were all too clear. Management announced that Boseto would be mothballed for the next six months due to:

“The current and continuing soft market outlook for copper on world commodity markets, where copper prices have deteriorated by approximately $1,000 per tonne (approximately $0.5 per pound) during calendar year 2014 to their current four year lows and the prevailing high stripping ratio/restricted geometric nature of the Boseto open pits”.

Eerily, the reasons eventually cited for the closure of the mine late February echo Cathay Fortune’s own risk assessment made nearly three years earlier.

Cupric Canyon finalised the takeover of Boseto Mine for $35 million, which included repayment of creditors such as the Government of Botswana, Standard Chartered Botswana, Credit Suisse, Caterpillar Finance.


While the creditors received varying levels of repayment, the 422 workers at the mine boarded buses 0230hrs on February 27, 2015 as officials announced the end of a decade-long effort to extract value from the Kalahari Copperbelt.

According to unionists who were present on that frosty winter morning, the workers were ‘escorted’ by armed police into a fleet of buses and shipped to the nearby major village of Maun.

Botswana Mine Workers Union (BMWU) president, Jack Tlhagale, says the scenes of that night were only the beginning of a litany of indignities for former Boseto workers.

Returning from the mid-morning chaos, Tlhagale and BMWU rushed to the High Court to secure a liquidation order, only to realise that the events of the night had been the result of one creditor securing a liquidation order. “There were no retrenchment negotiations or packages. The company was liquidated and when that happens, you cannot negotiate anything.

“You are merely given what’s due to you by the liquidator according to your employment contract, meaning pro rata salary, leave and allowances outstanding.

“The assumption is that the company is being liquidated and does not have money.”

Standard Chartered Bank Botswana beat other creditors to the punch and secured the liquidation order from the High Court in Lobatse. The preferred liquidator promptly tiered creditors in order of legal liability, with the workers pegged third after secured creditors such as government. The union aired radio and newspaper advertisements urging former workers to come forward for the compilation of a claim for the liquidator.

Tlhagale recalls that Cupric Canyon’s announced that it was prepared to make an offer to creditors as part of a bid to takeover Boseto. Workers and their union quickly found out that not all creditors are equal before the law.

When Cupric called a creditors meeting for June 12 to table their offer, one major creditor would not make it to that meeting – the workers.

“Workers found their accounts credited with their dues meaning the salaries, leave days and allowances before that meeting,” Tlhagale says.

“By sheer headcount, the workers would have outnumbered any other creditor at the creditors meeting and someone decided to pay them before that. “In any case, it would have been difficult for us to again locate the workers for that creditors meeting and they would also not have had the funds to travel from the various places across the country to where they were scattered after the mine’s closure.

“It could have put them into unnecessary difficulties.”

For the union, former Boseto workers’ problems are anchored in mining laws that favour investors over workers when mines run into trouble. According to Tlhagale, the law allows mine owners to pull off surprise closures and pay the legal bare minimum to affected workers, regardless of whether a recognition agreement with a union has been signed or not.

“At present, their former employer does not exist. There’s no Discovery Copper Botswana and no workers associated with it in the eyes of the law. The law should say, “before this many days, you have to meet with your workers and their union,” Tlhagale said. Under the Mines and Minerals Act, mines are only required to notify the Minister of Minerals, Energy and Water Resources of their intention to close. If the mine intends to shutdown production, it is required to give a year’s notice to the minister, failing which such notice should be made within 14 days of the closure.

“On receiving notification or if he otherwise becomes aware of any cessation, the minister may cause the matter to be investigated and may either approve cessation or order the resumption of production if this is in line with good mining practice,” the act reads, putting the ball firmly in the mine’s court.


Scattered across the country in their ‘home villages’ the sole glimmer of hope for the 422 Boseto workers is a commitment made this week by Cupric Canyon, Boseto’s new owner.

The High Court lifted Boseto out of judicial management earlier in the month, following approval of the offer at the June 12 creditors meeting. Cupric Canyon on Monday outlined its plans for Boseto, which it says will transform into an underground mine from the current open pit and reopen by 2018.The priority, however, is on expanding and improving the processing plant at Boseto with a view to use it for the Cupric’s flagship project, a mine at the adjacent Zone 5, where construction is scheduled for next year.

Khoemacau Copper Mining, the Cupric Canyon subsidiary developing the Zone 5 mine, has so far taken on board 30 workers who were formerly employed by Discovery Metals.

“We have an undertaking to employ some of the redundant workers when Boseto reopens in 2018, but it would be unrealistic to have expectations of reemploying all the workers,” Cupric Africa Head of Human Resources and Communications, Clare Calver, told journalists.

Discovery Metals built Boseto Mine at a cost of $175 million and Cupric Canyon bought it for $35 million. Workers put in their sweat and tears and were driven out in buses.