Australian Resource Company, A-CAP Energy Limited; a mineral exploration outfit, is currently developing the base load Letlhakane Uranium Energy Resource Project, which has signaled yet another delay in the pre-construction and construction of what is anticipated to be one of Botswana‘s rarest mineral extraction undertakings.
In a statement issued this week, the BSE and Australian Securities Exchange listed outfit said it completed the Bankable Feasibility Study process in 2014 and was initially expecting first production 2015; however regulatory delays pushed the production timelines to 2018. The company then revised their construction targets to the last quarter of 2018, after government awarded them a 22 year mining license in September 2016.
On the 10th of July 2017, A-Cap filed a regulatory requirement with the then Ministry of Minerals Energy and Water Resources, Department of Mines, advising that the preconstruction and construction period of the Letlhakane Uranium project would be delayed by two years. In the letter, the company informed Department of Mines of the delayed recovery in the price of uranium, coupled with staged project optimization work currently being undertaken by the Company aimed at improving recovered uranium grade and reduces U3O8 process costs, focusing on acid supply and consumption. These factors would therefore affect the target timelines as set out in the Company’s mining license application.
A-Cap, then received correspondence from The Botswana Minister of Mineral Resources, Green Technology and Energy Security on 20 September 2017, formally advising the Company that the amendment to the programme of works for Mining License 2016/16L was approved. Then a report by World Nuclear Association, also signaled that uranium production was on an upward trajectory, having reached 62,221tU in 2016, and according to the report, known global resources of uranium are more than adequate to satisfy reactor requirements to well beyond 2035.
On Wednesday 21 August 2019, A-Cap announced that in April this of year, they submitted another letter to Department of Mines requesting further amendment to the commencement of the pre construction and construction period by 2 years. “On Tuesday 20 August 2019, we received confirmation by letter from the Botswana Mineral Resources, Green Technology and Energy Security that the amendment was approved” said A-Cap in a statement.
According to the company, the amended date for the commencement of the pre-construction and construction period is 30th October 2019. In their 31st July 2019 quarterly report, A-Cap noted their Letlhakane Uranium Project remains an important project asset within the diversified minerals strategy. “While the nuclear industry is confident in the long-term fundamentals of uranium and nuclear power, there is less certainty in the short term with industry expectation that the market will gradually move towards balance from calendar year 2025” said Paul Ingram, A- Cap deputy Chairman.
The Letlhakane Uranium Project, is one of the world’s largest global top 10 undeveloped Uranium Deposits. The Project lies adjacent to Botswana’s main North-South infrastructure corridor that includes a sealed all-weather highway, the A1 road, railway line and the national power grid, all of which make significant contributions to keeping the capital cost of future developments low.
A mining License application for PL 45/2004 –Letlhakane, was submitted to the Botswana Department of Mines based on the results of a technical study and financial modeling. The technical study was based on shallow open pit mining and heap leach processing to produce up to 3.75 million pounds of uranium per annum, over a mine life of 18 years.
The study incorporated the most up to date metallurgical results and process route, optimized mineral resources, mining, capital and operating costs developed by our feasibility specialists in Australia and internationally. The technical study confirmed that the Project has the right mix of a good resource, low capital and operating costs and is well positioned to be taken into early production in line with forecast rising uranium price. A-Cap‘s diversified minerals strategy also encompasses the exploration and acquisition of nickel cobalt projects to supply cathode materials to the global EV battery industry.
A-Cap is the first company to produce a JORC compliant uranium resource in Botswana and the Company firmly believes that as further exploration capital is spent in country, it will become a significant contributor to the world uranium inventory. The Company’s 100% owned Letlhakane Uranium Project, is located in northeast Botswana and has a recently upgraded JORC compliant resource of 351 Mlbs Uâ‚ƒOâ‚ˆ (at a 100ppm cut-off) – an increase of 35%.
Within this global resource, a higher-grade resource has been defined of 143.2 Mt at 284ppm Uâ‚ƒOâ‚ˆ for a contained 89.7 Mlbs Uâ‚ƒOâ‚ˆ. This Resource increase comfortably positions the Letlhakane Project well within the top ten undeveloped uranium deposits in the world, and has cemented A-Cap on its road to production.
This century is always looking at improving new super high speed technology to make life easier. On the other hand, beckoning as an emerging fierce reversal force to equally match or dominate this life enhancing super new tech, comes swift human adversaries which seem to have come to make living on earth even more difficult.
The recent discovery of a pandemic, Covid-19, which moves at a pace of unimaginable and unpredictable proportions; locking people inside homes and barring human interactions with its dreaded death threat, is currently being felt.
Member of Parliament for Kanye North, Thapelo Letsholo has cautioned Government against excessive borrowing and poorly managed debt levels.
He was speaking in Parliament on Tuesday delivering Parliament’s Finance Committee report after assessing a motion that sought to raise Government Bond program ceiling to P30 billion, a big jump from the initial P15 Billion.
Government Investment Account (GIA) which forms part of the Pula fund has been significantly drawn down to finance Botswana’s budget deficits since 2008/09 Global financial crises.
The 2009 global economic recession triggered the collapse of financial markets in the United States, sending waves of shock across world economies, eroding business sentiment, and causing financiers of trade to excise heightened caution and hold onto their cash.
The ripple effects of this economic catastrophe were mostly felt by low to middle income resource based economies, amplifying their vulnerability to external shocks. The diamond industry which forms the gist of Botswana’s economic make up collapsed to zero trade levels across the entire value chain.
The Upstream, where Botswana gathers much of its diamond revenue was adversely impacted by muted demand in the Midstream. The situation was exacerbated by zero appetite of polished goods by jewelry manufacturers and retail outlets due to lowered tail end consumer demand.
This resulted in sharp decline of Government revenue, ballooned budget deficits and suspension of some developmental projects. To finance the deficit and some prioritized national development projects, government had to dip into cash balances, foreign reserves and borrow both externally and locally.
Much of drawing was from Government Investment Account as opposed to drawing from foreign reserve component of the Pula Fund; the latter was spared as a fiscal buffer for the worst rainy days.
Consequently this resulted in significant decline in funds held in the Government Investment Account (GIA). The account serves as Government’s main savings depository and fund for national policy objectives.
However as the world emerged from the 2009 recession government revenue graph picked up to pre recession levels before going down again around 2016/17 owing to challenges in the diamond industry.
Due to a number of budget surpluses from 2012/13 financial year the Government Investment Account started expanding back to P30 billion levels before a series of budget deficits in the National Development Plan 11 pushed it back to decline a decline wave.
When the National Development Plan 11 commenced three (3) financial years ago, government announced that the first half of the NDP would run at budget deficits.
This as explained by Minister of Finance in 2017 would be occasioned by decline in diamond revenue mainly due to government forfeiting some of its dividend from Debswana to fund mine expansion projects.
Cumulatively since 2017/18 to 2019/20 financial year the budget deficit totaled to over P16 billion, of which was financed by both external and domestic borrowing and drawing down from government cash balances. Drawing down from government cash balances meant significant withdrawals from the Government Investment Account.
The Government Investment Account (GIA) was established in accordance with Section 35 of the Bank of Botswana Act Cap. 55:01. The Account represents Government’s share of the Botswana‘s foreign exchange reserves, its investment and management strategies are aligned to the Bank of Botswana’s foreign exchange reserves management and investment guidelines.
Government Investment Account, comprises of Pula denominated deposits at the Bank of Botswana and held in the Pula Fund, which is the long-term investment tranche of the foreign exchange reserves.
In June 2017 while answering a question from Bogolo Kenewendo, the then Minister of Finance & Economic Development Kenneth Mathambo told parliament that as of June 30, 2017, the total assets in the Pula Fund was P56.818 billion, of which the balance in the GIA was P30.832 billion.
Kenewendo was still a back bench specially elected Member of Parliament before ascending to cabinet post in 2018. Last week Minister of Finance & Economic Development, Dr Thapelo Matsheka, when presenting a motion to raise government local borrowing ceiling from P15 billion to P30 Billion told parliament that as of December 2019 Government Investment Account amounted to P18.3 billion.
Dr Matsheka further told parliament that prior to financial crisis of 2008/9 the account amounted to P30.5 billion (41 % of GDP) in December of 2008 while as at December 2019 it stood at P18.3 billion (only 9 % of GDP) mirroring a total decline by P11 billion in the entire 11 years.
Back in 2017 Parliament was also told that the Government Investment Account may be drawn-down or added to, in line with actuations in the Government’s expenditure and revenue outturns. “This is intended to provide the Government with appropriate funds to execute its functions and responsibilities effectively and efficiently” said Mathambo, then Minister of Finance.
Acknowledging the need to draw down from GIA no more, current Minister of Finance Dr Matsheka said “It is under this background that it would be advisable to avoid excessive draw down from this account to preserve it as a financial buffer”
He further cautioned “The danger with substantially reduced financial buffers is that when an economic shock occurs or a disaster descends upon us and adversely affects our economy it becomes very difficult for the country to manage such a shock”