Cradle Arc, the African focused base and precious metals exploration and production company, said it has made an application to the Botswana High Court for its 60% owned subsidiary, Leboam Holdings (Pty) Limited, the holding company of the Mowana Copper Mine in Botswana, to be placed into provisional liquidation as parallel talks on an alternative funding arrangement continue. The application is set to be heard on Wednesday, 19 December 2018.
The move follows the company’s announcement on 6 December 2018, where it was revealed that whilst Fujax advanced the sum of US$1m to Leboam pending completion of the extended facility, Fujax has now informed the company that it will not permit any further drawdowns unless Leboam agrees to vary the previously agreed, but not legally binding, terms and grant security over its interest in the Mowana Copper Mine in Botswana for all outstanding historical and new debt owed to Fujax. The current security holders have not agreed to this request.
The Company has been notified that Fujax and Leboam’s 40 per cent. shareholder have made a separate application to the Botswana High Court, to be heard today, 18 December 2018, for judgement to consider placing Leboam under judicial management and in the alternative, that is after the Court refuses to grant judicial management order, to place it under, provisional liquidation.
Cradle Arc is opposing the application for judicial management on the basis that Fujax has neither provided a viable alternative financing plan for Leboam, nor a credible business plan for the Mowana mine.
Although operations at the mine have been suspended, significant remedial action has been performed on the process plant, the water provision from its wellfield and various other infrastructural elements of the mine. Rental agreements for mining equipment have been cancelled, and equipment removed from site pending settlement of outstanding and overdue creditor balances.
“While it is unfortunate that we have had to take this step, provisional liquidation as opposed to final liquidation is by no means the end for Mowana, but rather provides the Company an opportunity to continue talks, along with the provisional liquidator, for a sustainable funding solution at the mine,” said Kevin van Wouw, CEO of Cradle Arc.