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Cradle Arc to suspend Mowana as Fujax changes terms of US$4M facility extension

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Cradle Arc to suspend Mowana as Fujax changes terms of US$4M facility extension

Cradle Arc PLC unit Leboam Holdings Pty. Ltd. was unable to complete the conditional US$4 million extension to its pre-existing working capital facility with Fujax Minerals and Energy Ltd., which depended on completing necessary documentation and latter's final credit committee approval.

Despite advancing US$1 million to Leboam, pending the completion of the extended facility, Fujax has now said it will not permit any further drawdowns unless Leboam agrees to vary the previously agreed terms and grant security over its interest in the Mowana copper mine in Botswana, in respect to the extension as well as other debts due by the company.

Subsequently, Leboam entered into negotiations with its secured debt providers including ZCI Ltd. to seek their consent for sharing security over Mowana with Fujax. However, the company said the negotiations have not been progressing positively.

The inability to draw down the facility has placed pressure on Leboam's working capital position, due to which its board decided to temporarily suspend mining operations at Mowana.

The company said Dec. 6 that it is seeking insolvency advice and has requested the trading of its shares on the London Stock Exchange to be suspended until its financial position becomes clear.

In October, Leboam secured a US$2 million loan facility from Cradle Arc's largest shareholder, PenMin Botswana Pty. Ltd. to address intermittent breakdowns at Mowana, which led to the mine to failing to meet production targets in the third quarter.