AFRICAN Rainbow Capital (ARC) is considering whether it would invest further in the proposed Elandsfontein phosphate mine which it said in an investment update today required “… significant additional capital”.
ARC has a 26% stake in the mine which is controlled by Kropz, an unlisted food security firm established by Mike Nunn, a well down mining and metals entrepreneur most famed for developing tanzanite as a semi-precious jewellery item.
ARC said in March that the Elandsfontein mine might require “additional capital” before commissioning following further studies in its processes and quality of the finished product. Commissioning of the mine, which was postponed in July last year, has now been pushed out to August 2019.
Said ARC: Most of the preparatory research work has been completed to assess how the processing plant needs to be modified. It is now expected that the mine and the plant will only be fully commissioned in August 2019.
“Significant additional capital will be required to complete the project and the ARC Fund is in the process of considering whether it would participate in the fund-raising”. It didn’t provide details of the funds that would be required to see the project through for another 15 months including commissioning costs.
ARC’s uncertainty regarding further participation in Elandsfontein may be a blow to Kropz which said in February it was mulling a number of financing options in the absence of cash flow it hoped would be generated.
Commenting on financing options in an interview with Miningmx, then newly appointed CEO, Ian Harebottle, said a listing was one possibility. “We haven’t decided yet. It’s just one of the options, or we could go the route of private equity. But we definitely have ambition to build Kropz beyond Elandsfontein,” he said.
The mine has also been challenged by non-governmental organisations (NGOs) who claim it will pollute the nearby Langebaan Lagoon in the Western Province. NGOs have contested the mine’s water use licence which was duly suspended by the South African government, only to be reinstituted late last year.
Phosphate is used in the fertiliser business.
ARC was established by mining entrepreneur and executive chairman of African Rainbow Minerals, Patrice Motsepe, in order to develop broad-based black economic empowerment. It has a broad range of business interests of which only a portion is in mining.
Motsepe’s ARC also has a joint venture agreement with former Harmony Gold CEO, Bernard Swanepoel, in the Last Mile Fund.