London-listed Shuka Minerals makes its debut on the JSE’s Alternative Exchange on Wednesday (21 May), making it the first miner to list on the exchange since Copper 360’s debut in April 2023.
CEO Richard Lloyd told Moneyweb the JSE listing gives it a presence in SA, which will assist in future capital raising and facilitate potential investment in SA mining opportunities.
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Shuka is listed on the London Alternative Investment Market (AIM), making the JSE a secondary home for its shares.
Its main asset is the Rukwa coal mine in the Mkomolo district in Tanzania, which has been in care and maintenance for the past year.
The operation historically achieved output of 4 000 tons per month (tpm) but ran into difficulties in 2023 with its run-of-mine coal stockpile due to high moisture content.
Lloyd says funds are in place to restore the wash plant as part of a plan to achieve production of 5 000tpm, mostly for sale to East African cement producers. This would generate revenue of about $3 million a year, based on a sales target of $40-45 a ton, with margins nearly half this amount.
Kabwe zinc mine
A far more ambitious project is the proposed takeover of the Kabwe zinc mine in Zambia for $4.5 million and two million warrants from Leopard Exploration and Mining.
The $4.5 million comprises $1.5 million in cash, and the balance in shares issued at one British pence (p) each.
The two million warrants issued to Leopard Mining are exercisable at 12.5p per ordinary share at any time until 31 December 2027, with the condition that it does not end up owning more than 29.99% of Shuka’s total voting rights.
The Kabwe mine was previously operated by Anglo American and later Zambia Consolidated Copper Mines (ZCCM), after the mine was nationalised in 1974. It was mined continuously for 88 years until its closure in 1994 due to commodity price weakness.
It was ranked as one of the world’s highest-grade lead and zinc mining operations and is considered one of the famous mines in Africa.
This is also the mine for which Anglo American is facing a class action suit, after claims of lead poisoning affecting more than 100 000 locals. Anglo American denies the claims and is defending the case.
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The court filings say soil lead levels in the area are as much as 10 times the recommended safety levels.
The Kabwe lead mine (formerly known as Broken Hill) was mined between 1904 and 1994 and is claimed to have been under Anglo American SA control between 1925 and 1974.
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Shuka has a non-convertible, unsecured interest-free loan of £500 000 (R12 million) from Gathoni Muchai Investments, of which £250 000 (R6 million) has been advanced, with the balance being made available in due course. The loan is repayable once the company raises fresh capital of more than £2 million (R48 million).
‘Heavy focus’ on ESG
“The previous owners of Kabwe, Anglo American and ZCCM, were not that focused on ESG [environmental, social and governance factors],” says Lloyd.
“ZCCM ran it till 1995 and then shut it down. Looking at the lead levels in the population, we’ll do [our] darndest to improve it by placing a heavy focus on ESG.
“[ZCCM] employed 5 000 workers and many of them want their jobs back. There are currently a few artisanal miners working the area, so we can see the high-grade material they are picking up.
“We’re not too concerned about the artisanal miners, as we know many of them would love to have their old jobs back again.”
Shuka has until 11 June to wrap up the funding for the Kabwe mine acquisition, and Lloyd is confident this deadline will be met.
A competent persons report for the mine shows historical resources at average grades of 11.8% zinc and 1.9% lead, equivalent to 695 786 tonnes of zinc and 106 803 tonnes of lead. This suggest pre-tax cash flows of $1.841 billion (R33.1 billion) from the deposit.
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The site is also home to Broken Hill Man, said to be the first human fossil discovered in Africa and estimated at more than 270 000 years old. Lloyd says he intends to turn this into a national monument.
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