Brits rescue Ongopolo Mine -seals N$120-m deal with Weatherly

NAMIBIA’S biggest copper producer, Ongopolo Mining and Processing, yesterday announced it had signed a N$120 million agreement with international resources company Weatherly International Plc.

The agreement was signed on Tuesday, and is set to take effect at the end of June. In exchange for a N$120 million injection into Ongopolo, the London-listed company with its principal copper assets in Zambia will take over approximately 50 per cent of the Namibian company.Ongopolo, which has struggled with large capital commitments at its Kombat Mine, has long sought strategic international investors.The financial pinch has apparently affected its ability to sustain production at Tsumeb and the Otjihase and Matchless mines near Windhoek.In September last year, Government agreed to stand guarantee for a loan of up to N$70 million valid until October this year, it was revealed in the 2006-07 National Budget.”The transaction with Weatherly will allow Ongopolo to resume normal operations immediately,” Ongopolo stated in a press release yesterday.”There are unlikely to be any changes to the workforce in the short term, and given Weatherly’s intention to expand operations, there is a strong likelihood that significant new employment opportunities will result.The cash injection will also allow Ongopolo to resolve outstanding issues with its local creditors,” the company stated.Ongopolo Managing Director Andre Neethling told The Namibian yesterday that Weatherly had been chosen after competing with other investors based in Germany, South Africa and China.”The benefit is that it will allow for the development of all the country’s mining potential,” Neethling said, adding that the company did not see a problem with Weatherly taking over the controlling shares of the company.In the time running up to the completion of the transaction, Weatherly is set to assume management over Ongopolo in order to stabilise the company’s existing operations.Weatherly is apparently also keen to develop Tsumeb as a smelting hub for other mines in the region, and is contemplating the town as a potential destination for its own future production in Zambia.Weatherly International Plc acquired Pucu Minerals Limited, a company owning development rights in a Zambian copper-mining project, in late 2005.Ongopolo came into existence in late 1999 as a partnership between trade unions and former senior personnel of the then Tsumeb Corporation Limited (TLC).The new company’s aim was to make a bid for the takeover of TCL, which had stopped its mining and smelting operations when it was placed in provisional liquidation by its then owners, Gold Fields Namibia, in April 1998.In March 2000, almost two years after that closure, Ongopolo took control of the former TCL mines and its smelter at Tsumeb and started bringing the renamed company back to life.When TCL was placed in provisional liquidation towards the end of April 1998, a sharp fall in the copper price was cited as one of the major reasons for the financial crisis that had forced the company to that point.On the day of TCL’s provisional liquidation, the copper price stood at US$1 855 a ton on the London Metals Exchange, having fallen from a level of US$2 700 a ton in July 1997.Before Ongopolo took over TCL in March 2000, the copper price had fallen further to levels between US$1 300 and US$1 400 a ton, but it had again recovered to a level of around US$1 800 by the time of the take-over.Since then, the price of the metal has more than trebled to reach record highs, and was set at US$7 147 on the London Metals Exchange on Tuesday this week.Neethling said even with the current high price of copper, it would still be in the company’s long-term interest to partner with Weatherly.* Additional reporting by Werner MengesIn exchange for a N$120 million injection into Ongopolo, the London-listed company with its principal copper assets in Zambia will take over approximately 50 per cent of the Namibian company.Ongopolo, which has struggled with large capital commitments at its Kombat Mine, has long sought strategic international investors.The financial pinch has apparently affected its ability to sustain production at Tsumeb and the Otjihase and Matchless mines near Windhoek.In September last year, Government agreed to stand guarantee for a loan of up to N$70 million valid until October this year, it was revealed in the 2006-07 National Budget.”The transaction with Weatherly will allow Ongopolo to resume normal operations immediately,” Ongopolo stated in a press release yesterday.”There are unlikely to be any changes to the workforce in the short term, and given Weatherly’s intention to expand operations, there is a strong likelihood that significant new employment opportunities will result.The cash injection will also allow Ongopolo to resolve outstanding issues with its local creditors,” the company stated.Ongopolo Managing Director Andre Neethling told The Namibian yesterday that Weatherly had been chosen after competing with other investors based in Germany, South Africa and China.”The benefit is that it will allow for the development of all the country’s mining potential,” Neethling said, adding that the company did not see a problem with Weatherly taking over the controlling shares of the company. In the time running up to the completion of the transaction, Weatherly is set to assume management over Ongopolo in order to stabilise the company’s existing operations.Weatherly is apparently also keen to develop Tsumeb as a smelting hub for other mines in the region, and is contemplating the town as a potential destination for its own future production in Zambia. Weatherly International Plc acquired Pucu Minerals Limited, a company owning development rights in a Zambian copper-mining project, in late 2005.Ongopolo came into existence in late 1999 as a partnership between trade unions and former senior personnel of the then Tsumeb Corporation Limited (TLC).The new company’s aim was to make a bid for the takeover of TCL, which had stopped its mining and smelting operations when it was placed in provisional liquidation by its then owners, Gold Fields Namibia, in April 1998.In March 2000, almost two years after that closure, Ongopolo took control of the former TCL mines and its smelter at Tsumeb and started bringing the renamed company back to life.When TCL was placed in provisional liquidation towards the end of April 1998, a sharp fall in the copper price was cited as one of the major reasons for the financial crisis that had forced the company to that point.On the day of TCL’s provisional liquidation, the copper price stood at US$1 855 a ton on the London Metals Exchange, having fallen from a level of US$2 700 a ton in July 1997.Before Ongopolo took over TCL in March 2000, the copper price had fallen further to levels between US$1 300 and US$1 400 a ton, but it had again recovered to a level of around US$1 800 by the time of the take-over.Since then, the price of the metal has more than trebled to reach record highs, and was set at US$7 147 on the London Metals Exchange on Tuesday this week.Neethling said even with the current high price of copper, it would still be in the company’s long-term interest to partner with Weatherly.* Additional reporting by Werner Menges