Discovery Metals’ future uncertain

Discovery Metals Limited consolidated group directors stated that the company’s future financial results are dependent on the successful ramp up of the Zeta underground development.

In the recently released Annual Report the copper mining company Chairman Jeremy Read and Chief Executive Officer Robert Fulker stated that there is fear that developing and operating its copper operations in Botswana may be affected by a number of challenges. The group fears that there is no certainty that the group will have access to financial resources sufficient to fund its obligations and operations going forward. The company believes that the financial forecast for Boseto operation together with the pending equity and debt re-profiling will ensure the company operates as a going concern for the next 12 months.

“If the consolidated Group is not able to generate positive cashflow from operations it may not be able to continue.” Due to operation in only one area Boseto, the company will be exposed to lack of diversity, which might affect future returns. “There is actual risk that the actual mineralization may be different to the expected results from exploration.” They further reported that commencement of the Zeta underground mine project is dependent upon successfully raising finance sufficient to bring it to an operational stage and fund related working capital requirements. The company has committed under the debt re-profile agreed with lenders to raise equity on or before 31 December 2014 for this purpose. Other major risks identified include flooding and mud inrush in the sub-level cave, cave subsidence, geotechnical risks associated with the caving assumption and shortage of skill and expertise in the country. The company’s Cave Management Plan  (CMP) and Ground Control Management Plan (GCMP) identified strategies to minimise these risks.

Meanwhile the company’s progress on the Zeta underground mining project is underway and tender submissions have been evaluated and detailed discussion is being held with the preferred candidate. The final award of the contract is expected to occur by the end of the September 2015 . Finalised constructions designs for the initial two years of development for the Zeta underground mine project are projected to be complete in December 2015.