22 Jan 2014

The ongoing retrenchment exercise at Discovery Metals Limited’s (DML) Boseto Copper Mine project is a result of financial distress affecting the company.

Discovery Metals recently announced that it was retrenching 85 staff from its Boseto Copper Mine at Toteng in the North West Botswana.

In an interview, the DML country manager, Mr Mokwena Morulane said the company’s operating costs, fuelled by the high costs of generating own electricity, collapsing copper prices and the company’s economic status forced them to restructure.

Nevertheless, he said the company would need to up its production to mitigate the high costs, adding that the retrenchment cuts across all sections of the Boseto mine.

According to Mr Morulane, some of the affected staff has already received their letters of termination of employment while others will receive them when they report for duty from the holidays.

He said all the affected staff is expected to have received such letters by end of January. Further, he said, DML had not invited staff members to apply for voluntary retrenchment as time was not on their side. “We are in a very precarious situation, we needed to act quickly in terms of saving costs,” he added.

However, he noted that the company still believes that the mine’s fortunes can be turned around hence the restructuring process which was aimed at improving efficiency.

“At the same time, prices must support us though we do not have control over them,”Mr Morulane added. Further, he pointed that it is currently difficult for the company to lure financiers due to its debt which is in access of $135 million.

The situation has not been eased by the reported $224.3 million loss in the 2013 financial year and the $21.1 million loss recorded in 2012.

“If the copper prices can continue to collapse further, operating costs continue to go up and banks want their money, that would make us to close,” he pointed out. And according to Mr Morulane, the current operations indicate that the initial production projections were off track, but noted that Boseto Copper Mine is still a sustainable business.

“We continue to talk to other financiers, all is not lost, this is a project of national interest,” he stated. Discovery Metals has been finding it difficult to pay its lenders and the company was recently granted a second waiver by its lenders to defer payments. Meanwhile, DML has reported a five per cent quarter-on-quarter increase in concentrate production at Boseto Copper Mine. ENDS