Turnstar shifts focus to Shopping malls
Business
Turnstar Group Holdings’ profit before tax was up 23% and revenue was up by 5% for the year ended January 2016 as the property market, particularly the commercial sector, continues to impress.
The group wrapped up what has been has been an impressive run by listed property entities in the Botswana Stock exchange with just an exception to Letlole La rona which posted lower revenues for the half year ended December 2015. Primetime Property Holdings Limited, which is yet to release its interim results, has an issued a cautionary note that profit after tax for the six months ended 29 February 2016 is expected to be significantly higher than the prior interim period to 28 February 2015.
The group’s revenues have been propelled by increased rentals which went up from P236 million to P248 million after straight-line adjustments. The group’s profit before taxation for the reporting period is at P230 million, a surge of 23% from the previous corresponding period. The balance sheet was bolstered by a 13% increase in value of Investment property value to P 2 billion including work in progress, bringing the company’s total assets to P2.4 billion up by 20% from the previous year’s P2 billion. The Net asset Value per linked unit is increased by 14% to 2.76.
The group’s subsidiary, Mlimani in Tanzania, has proven to be a good invest for the Botswana property giant as it contributed P120.8 Million to the total group revenue representing a 49% contribution. The Tanzania based subsidiary which boasts of Mlimani City-the largest mall in Tanzania which opened in 2006- now has investment Property worth over 1 billion representing 52% of the total group investment property of 2 Billion. The BSE listed Group has announced that the development of Phase 3, Mlimani City Tanzania is well in progress.
Mlimani City is being expanded to include additional retail and commercial space including basement parking, additions to the Conference Centre and a Botanical Garden. The additional space is also pre let to a large extent. The expansion is expected to cost USD 25 million. The project is financed by Barclays Bank of Botswana for USD 20.7 million and Turnstar Holdings for USD 4.3 million. The expected date of completion is November 2016.
Turnstar company, home to the local based operations, had its revenue decrease by 4% to P 126.7m due to the sale of the Fairground Office Park property. However, the company’s profitability was strengthened by additional incomes of P 26.3 million which includes interest earned from investment in debentures of Mlimani Holdings Limited of P 21.9 million as well P7.5 million profit generated from the sale of Fairgrounds property. The Fair value of investment property soared by 125% from the previous P6.4 million to 14.4 million.
The profit before taxation for the year ended 31 January 2016 lunged by 19% to P131.3 million before fair value adjustment. The company has announced that the development of Phase 4, Game City shopping centre is nearing completion. This comes after two years since the company embarked on expanding its biggest asset and also the largest mall in Botswana.
Game City is being expanded to include additional retail space including a fashion avenue, restaurant area including a food court, entertainment area and a parkade. The additional space is pre let to a large extent. The project is financed by First National Bank of Botswana for P170 million and interest rate of Prime less 2.1%. The expected date on completion is September 2016.
Turnstar says that it will be limiting its exposure to the office property sub-sector as there has been mounting concerns about oversupply of office spaces due to newly constructed buildings in the new Central Business District (CBD) which comprises mainly of office spaces.
“The sale of the Fairgrounds Office Park property is consistent with the strategic imperative to manage exposure to the office property sub-sector in Botswana which is expected to remain under pressure with increasing vacancies in the medium term. Pursuant to the above, Turnstar’s exposure to the office property sub-sector in Botswana has been strategically limited to one office property, being Turnstar House, which is fully tenanted. Turnstar will continue to maximise performance through the active management of its property portfolio,” read part of the commentary that accompanied the financial statements.
Turnstar Holdings with a market capitalization of P1.7 billion in the BSE’s main domestic counter is currently trading at P3.06, representing a decline of 0.3% since the year began. Turnstar, together with Letlole la Rona are the only property listed companies that have had their share price decline so far this year. The company’s Directors have approved a final distribution of 10.5 thebe per linked unit, split as follows; Debenture interest of 7.65 thebe and 3.85 thebe dividend per share in respect of the six months ended 31 January 2016 to all registered unit holders with the company at close of business on 13th May 2016.
Still on the BSE, the company intends to launch an offering of USD denominated senior unsecured compulsory convertible bonds to raise gross proceeds of US$ 30,000,000. It is expected that the Convertible Bonds will be issued during May 2016 for a period of 7 seven year maturing in 2023. The estimated maturity conversion rate is expected to be between P5 and P5.40.
Business
New Khoemacau owners commit to mine’s multibillion Pula expansion
The future of Botswana’s largest copper and silver operation, Khoemacau Copper Mining, looks promising as the new owners, MMG Group, commit to the mine’s expansion plans. MMG, an Australian headquartered company owned by China, has expressed its dedication to doubling Khoemacau’s production and transforming it into one of the most significant high-grade copper operations in Africa.
Nan Wang, the Executive General Manager for Australia and Africa at MMG, stated that while the immediate focus is on maintaining a consistent production level of 60ktpa, there are solid plans to increase Khoemacau’s production capacity. The company aims to double its production from 3.65Mtpa to 8.15Mtpa, resulting in an increase in payable copper from approximately 60ktpa to around 130ktpa.
To achieve this expansion, Khoemacau has completed a pre-feasibility study on the project and a solar power initiative. The next step is to conduct a feasibility study, which will pave the way for increased production capacity. Additionally, Khoemacau has identified extensive exploration opportunities across its license area, positioning the company for an exciting new phase of development.
The current Khoemacau operation reached full production and nameplate capacity in December 2022, following over a decade of investment totaling over P10 billion. This significant investment allowed for an intense exploration program, resulting in the development of the most automated underground mining operation in Botswana. The first concentrate was produced in June 2021, and the product entered the export market in July of the same year. Throughout 2022, the company has been working on the pre-feasibility study for the expansion project, with the feasibility study scheduled for the following year.
The expansion plans will involve the construction of a new world-class process plant in Zone 5, where the current mining of ore takes place. This new plant will be larger than the existing one in Boseto, which currently receives ore from Zone 5. The expansion will also involve the development of new underground mines, including Mango, Zone 5 North, and Zeta North East. These additional mines will bring the total number of underground shafts at Khoemacau to six. The ramp-up of production from the expansion is expected to occur in 2026.
Khoemacau, which acquired assets in the Kalahari Copper Belt after the liquidation of Discovery Metals in 2015, currently employs over 1500 people, with the majority being Batswana. The Khoemacau Mine is located in north-west Botswana, in the emerging Kalahari Copperbelt. It boasts the 10th largest African Copper Mineral Resource by total contained copper metal and is one of the largest copper sedimentary systems in the world outside of the Central African Copperbelt.
The mine utilizes underground long hole stoping as its mining method and conventional sulphide flotation for processing. Resource drilling results have shown the existing resources to have continuity at depth, and there are several exploration targets within the tenement package that have the potential to extend the mine’s life or increase productivity.
The Zone 5 mine has already ramped up production, and further expansion in the next five years will be supported by the deposits in the Zone 5 Group. The estimated mine life is a minimum of 20 years, with the potential to extend beyond 30 years by tapping into other deposits within the tenement package.
In conclusion, the commitment of MMG Group to Khoemacau’s expansion plans signifies a bright future for Botswana’s largest copper and silver operation. With the completion of pre-feasibility and feasibility studies, as well as significant investments, Khoemacau is poised to become one of Africa’s most important high-grade copper operations. The expansion project will not only increase production capacity but also create new job opportunities and contribute to the economic growth of Botswana.
Business
Khoemacau Copper Mining to be acquired by MMG Limited
Khoemacau Copper Mining, a leading copper mining company, has recently announced its acquisition by MMG Limited, a global resources company based in Australia. This acquisition marks a significant milestone for both companies and demonstrates their commitment to continued investment, growth, and sustainability in the mining industry.
MMG Limited is a renowned mining company that operates copper and other base metals projects across four continents. With its headquarters in Melbourne, Australia, MMG has a strong track record in mining and exploration. The company currently operates several successful mines, including the Dugald River zinc mine and the Rosebery polymetallic mine in Australia, the Kinsevere copper mine in the Democratic Republic of Congo, and the Las Bambas Mine in Peru. MMG’s extensive experience and expertise in mining operations make it an ideal partner for Khoemacau.
MMG’s commitment to sustainability aligns perfectly with Khoemacau’s values and priorities. Khoemacau has always placed a strong emphasis on safety, health, community, and the environment. MMG shares this commitment and applies the principles of good corporate governance as set out in the Corporate Governance Code of the Hong Kong Listing Rules. As a member of the International Council on Mining and Metals (ICMM), MMG adheres to sustainable mining principles, ensuring responsible and ethical practices in all its operations.
Over the past 12 years, Khoemacau’s current shareholders have made significant investments in the development of the company. With approximately US$1 billion deployed in the project, Khoemacau has successfully transformed from an exploration and discovery phase to a fully-fledged operating copper mine. The completion of the ramp-up of the Zone 5/Boseto operations has set the stage for the next phase of expansion.
With the acquisition by MMG, Khoemacau is poised for an exciting new chapter in its development. The completion of a pre-feasibility study on the Khoemacau expansion and a solar power project has paved the way for increased production capacity. The feasibility study will be the next step in doubling the production capacity from 3.65 million tonnes per annum (Mtpa) to 8.15 Mtpa, resulting in a significant increase in payable copper from approximately 60,000 tonnes per annum (ktpa) to 130,000 ktpa. Additionally, Khoemacau has extensive exploration opportunities across its license area, further enhancing its growth potential.
The CEO of Khoemacau, Johan Ferreira, expressed his gratitude to the current owners for their stewardship of the company and their successful transformation of Khoemacau into a fully operational copper mine. He also highlighted the company’s focus on the expansion study and its vision for the future with MMG. Ferreira emphasized that the partnership with MMG will ensure Khoemacau’s long-term success, delivering employment, community benefits, and economic development in Botswana.
MMG Chairman, Jiqing Xu, echoed Ferreira’s sentiments, stating that the acquisition of Khoemacau aligns with MMG’s growth strategy and vision. Xu emphasized MMG’s commitment to creating opportunities for all stakeholders, including shareholders, employees, and communities. He expressed confidence in Khoemacau’s expansion potential and the company’s ability to realize its full potential with the support of MMG.
The sale of Khoemacau to MMG is subject to certain conditions precedent and approvals, with the expected closing date in the first half of 2024. This acquisition represents a significant step forward for both companies and reinforces their commitment to sustainable mining practices, responsible resource development, and long-term growth in the mining industry.
In conclusion, the acquisition of Khoemacau Copper Mining by MMG Limited signifies a new era of investment, growth, and sustainability in the mining industry. With MMG’s extensive experience and commitment to responsible mining practices, Khoemacau is well-positioned for future success. The partnership between the two companies will not only drive economic development but also ensure the safety and well-being of employees, benefit local communities, and contribute to the overall growth of Botswana’s mining sector.
Business
BPC Signs PPA with Sekaname Energy
The Botswana Power Corporation (BPC) has taken a significant step towards diversifying its energy mix by signing a power purchase agreement with Sekaname Energy for the production of power from coal bed methane in Mmashoro village. This agreement marks a major milestone for the energy sector in Botswana as the country transitions from a coal-fired power generation system to a new energy mix comprising coal, gas, solar, and wind.
The CEO of BPC, David Kgoboko, explained that the Power Purchase Agreement is for a 6MW coal bed methane proof of concept project to be developed around Mmashoro village. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy in the energy mix. The use of coal bed methane for power generation is an exciting development as it provides a hybrid solution with non-dispatchable sources of generation like solar PV. Without flexible base-load generation, the deployment of non-dispatchable solar PV generation would be limited.
Kgoboko emphasized that BPC is committed to enabling the development of a gas supply industry in Botswana. Sekaname Energy, along with other players in the coal bed methane exploration business, is a key and strategic partner for BPC. The successful development of a gas supply industry will enable the realization of a secure and sustainable energy mix for the country.
The Minister of Minerals & Energy, Lefoko Moagi, expressed his support for the initiative by the private sector to develop a gas industry in Botswana. The country has abundant coal reserves, and the government fully supports the commercial extraction of coal bed methane gas for power generation. The government guarantees that BPC will purchase the generated electricity at reasonable tariffs, providing cash flow to the developers and enabling them to raise equity and debt funding for gas extraction development.
Moagi highlighted the benefits of developing a gas supply industry, including diversified primary energy sources, economic diversification, import substitution, and employment creation. He commended Sekaname Energy for undertaking a pilot project to prove the commercial viability of extracting coal bed methane for power generation. If successful, this initiative would unlock the potential of a gas production industry in Botswana.
Sekaname Energy CEO, Peter Mmusi, emphasized the multiple uses of natural gas and its potential to uplift Botswana’s economy. In addition to power generation, natural gas can be used for gas-to-liquids, compressed natural gas, and fertilizer production. Mmusi revealed that Sekaname has already invested $57 million in exploration and infrastructure throughout its resource area. The company plans to spend another $10-15 million for the initial 6MW project and aims to invest over $500 million in the future for a 90MW power plant. Sekaname’s goal is to assist BPC in becoming a net exporter of power within the region and to contribute to Botswana’s transition to cleaner energy production.
In conclusion, the power purchase agreement between BPC and Sekaname Energy for the production of power from coal bed methane in Mmashoro village is a significant step towards diversifying Botswana’s energy mix. This project aligns with BPC’s strategic initiatives to increase the proportion of low-carbon power generation sources and renewable energy. The government’s support for the development of a gas supply industry and the commercial extraction of coal bed methane will bring numerous benefits to the country, including economic diversification, import substitution, and employment creation. With the potential to become a net exporter of power and a cleaner energy producer, Botswana is poised to make significant strides in its energy sector.