Underfunding pushes Epangelo to sell stakes

WINDHOEKTOIVO NDJEBELA

State-owned minerals company Epangelo Mining is considering relinquishing its stake in various projects in exchange for cash to develop its exploration targets.
This, says managing director Elifas Hawala, is because of underfunding from the government, its sole shareholder.
“If money is not available from the shareholder then we will be forced to reduce our stake in our various projects in exchange for funding from other sources,” Hawala said.
The company currently needs N$400 million in order to develop its exploration targets, Hawala told Namibian Sun.
“Based on our current programme the company needs N$400 million over a period of three years in order to develop its exploration targets so as to make these projects attractive for further investment into productive mines,” he said.
Epangelo currently has 39 exclusive prospecting licences (EPLs), and awaits answers on its application for five others, but Hawala believes accumulating mining blocks is irrelevant if no funding is available to develop them.
The company, still in its infancy after coming onto the scene in 2008, currently boasts assets to the value of N$2 billion - well below the N$5 billion mark that it strives to have by 2015.
Hawala believes the three remaining years are more than enough to accumulate the required N$5 billion in asset value, although the long journey to achieving that will inevitably be bumpy.
“We have so far acquired about N$2 billion worth of assets, mainly through the shareholding in Swakop Uranium. We have three more years left to achieve the remaining target,” Hawala said.
He said there are funds to develop projects that have been explored and brought to “bankable feasibility stage”, as well as funds to explore and generate regional geological data through geological surveys, but Epangelo needs money to develop its projects.
“The challenge is to source funding in order to carry out exploration beyond where the geological survey stops and before the bankable feasibility stage.
“This is a challenge faced by all mineral resource countries. Epangelo has the ability to bridge the gap but needs funding.
“As a company created under the Companies Act, the shareholder is obliged to fund the company or else there is no reason to create a company if one is not ready to fulfil the expectations prescribed by law.”
The State-owned entity hopes to source funding by teaming up with partners in joint ventures - to fund specific exploration activities in exchange for stakes in some of its current licences.
“When the process reaches the definitive feasibility (DFS) stage both parties will then be required to fund the construction of the mine, proportionate to their shares. Epangelo will always keep a non-dilutive residual stake in all its licences,” the MD said.
Epangelo has a 10% stake in Swakop Uranium, acquired through a loan arrangement at a cost of N$1.98 billion.