Windhoek - London-listed Namibian copper miner Weatherly International Plc has reversed a $3 million deal to spin off its flooded Kombat Mine to Cubenco 192 Ltd, after the South African firm failed to make a second option payment of US$600 000.
CEO of the London-based Weatherly Plc Rod Webster said the initial agreement with Cubenco 192 had been terminated, throwing into doubt chances that the flooded mine will be revived any time soon.
Kombat, a wet mine, was flooded in 2007.
Weatherly abandoned plans to dewater the mine citing shortage of electricity and high dewatering costs.
"As Cubenco 192 has failed to make the second option fee payment of $600 000 within the timeframe specified in the Cubenco agreement, the agreement has been terminated," Webster said in a statement.
He made it clear that reviving Kombat no longer falls in the Weatherly's radar. The struggling Namibian miner two weeks ago sold its smelting business to Dundee Precious Metals (DPM) for $33 million.
Weatherly said proceeds from the Namibia Customs Smelter (NCS) sale would clear debts and boost its war chest with $13 million cash, enough capital to revive Matchless, Otjihase and Tschudi copper mines which were shut down in December 2008 when copper prices bottomed out.
"In the near term however, the priority remains the re-opening of the Matchless and Otjihase mines and the development of an open pit project at Tschudi," Webster said.
But even if Weatherly is still nurturing plans to sell the flooded Kombat, the mine would be hard to dispose. Hans Nolte, MD of the wholly owned Namibian subsidiary, Weatherly Namibia said bids for the flooded mine are still being accepted.
But high costs of dewatering the mine could scare off potential buyers. The failure of the Cubenco deal to sail through points to Kombat as a high risk investment, which requires strong capital backing.
Nolte admitted that dewatering costs are staggering. Furthermore, when Weatherly ceased operations in 2007, the 'mine was only left with a limited ore reserve.' "There are two options to a potential buyer; dewater the mine and start operation and exploration or opt for treatment of tailings," Nolte said.
He said Weatherly has not done any study on the costs of dewatering. "When we stopped operations there was a limited ore reserve left, we were still busy drilling and the reserves were limited but there is potential for more discoveries," Nolte said.
