CAMEC enters new JV to house DRC assets

Allan Seccombe | Wed, 07 Nov 2007 10:25
[] -- CAMEC will create a new listed mining company for its DRC copper and cobalt assets by forming a joint venture with natural resources investor Dan Gertler’s Prairie International Ltd in an effort to kickstart the Mukondo project.

Central African Mining & Exploration Company (CAMEC) will transfer its 80% stake in BOSS Mining, a DRC-registered company, into the joint venture company.

BOSS holds half of Mukondo Mining and concessions C19 and C21, for which the government has revoked the licences. The matter is before the courts in the Congo.

The DRC justice ministry released a statement at the end of August this year detailing the revocation of the licences. It said C19 had reverted to state-owned miner Gecamines.

The government’s approach to CAMEC is understood to stem from its association with Billy Rautenbach, a Zimbabwean who formed BOSS, and has since been declared persona non grata in the DRC and barred from the Congo.

Rautenbach swapped BOSS for an eight percent stake in CAMEC. The DRC authorities contend BOSS acquired the C19 concession fraudulently.

Rautenbach, a colourful businessman, is wanted in South Africa to face customs fraud charges.

It is reliably understood the transaction between CAMEC and Prairie was made possible by an agreement between the two companies to exclude Rautenbach from the assets and joint venture company. Rautenbach is seen as the key obstacle to fully developing Mukondo, said to be potentially one of the richest cobalt mines.

The two companies are understood to have no secret agreement with the DRC government or guarantee this transaction will go ahead, but they have done what they think is necessary to win approval for the transaction by keeping Rautenbach out of the deal and creating a fresh company with no legacy issues.

Prairie owns Tremalt Ltd, which owns 80% of Savannah Mining, the holder of the other half of Mukondo as well as concessions C17 and C18 in the mineral-rich Katanga province. Tremalt will be transferred into the joint venture vehicle.

Gertler’s family trust is the major shareholder of Prairie. His companies form a significant player in the DRC’s diamond business.

“The two companies are very familiar with the Mukondo mine and surrounding concessions and are in the best position to develop and operate, while benefiting their shareholders and the people of DRC alike,” Andrew Groves, CAMEC CEO, said in a statement.

The transaction is subject to approval from state-owned minerals company Gecamines, which is the 20% stakeholder in both BOSS and Savannah.

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A memorandum of understanding has been signed between CAMEC and Prairie, which will both provide a loan of $15m each to the joint venture company.

The joint venture vehicle will be listed in either London or Toronto.

CAMEC launched an unsuccessful bid for Katanga Mining to create the world’s largest cobalt company.

The DRC government in August revoked CAMEC’s mining licences, news that sent shares in the AIM-traded resources company into a tailspin and effectively quashing its takeover bid.

Katanga on Tuesday unveiled a transaction with Nikanor to merge their neighbouring assets to create a $3.3bn company that will be the world’s largest cobalt producer and fourth-largest copper supplier. Katanga CEO Arthur Ditto said the transaction had the government’s support, something CAMEC didn’t have.

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