In the news: Weatherly International


For those of you that missed it, the Financial Times had a piece on the Kenyan mining industry this week. Needless to say, Base Resources*† featured heavily in this; Base is the only large mining project in the country. However, the article suggests that this is about to change. It draws comparisons with Tanzania and Uganda, and discusses how Kenya missed out on the mineral exploration boom that drove its neighbours.
President Uhuru Kenyatta and his “ebullient” mining minister, Dan Kazungu, passed a new Mining Act this month. This involves a 20-year strategy to see twenty ‘Base Resources-type’ mining projects being developed. Government revenues over the last financial year were just US$16.5m, but this looks set to double by the end of this financial year (which is this month) and reach 10% of GDP, with the aim of climbing to somewhere in the region of US$7bn by 2030. Ambitious? Yes, but we saw the push that Dan Kazungu was making with Tim Carstens of Base at Mining Indaba in February, and they have an upcoming roadshow in Australia shortly.
Other than some informal mining of gold, there is just a small gemstones industry and some developing mining services in Kenya. This backs up what I learned on my site visit to Kwale in February, when I was told that there are good mining skills being taught in the country, but that most of these skills were subsequently exported. In addition to gold, the country has copper, rare earths and coal, but in reality Kenya doesn’t really know all that it has got. Dan Kazungu has said: “About 95% of the rock structures coming up from Tanzania have not even been mapped.” Indeed, Base itself is beginning to discover that its mineral sands deposit stretches way beyond its current licences, and is undertaking moves to explore further around Kwale, while some foreign companies are prospecting for niobium along the coast. Watch this space.

LON:WTI | 0.75p | US$11.5m| Under Review
Rescheduling of Tranche B Debt Repayment
Weatherly International has announced that it has agreed with lender Orion to defer the first instalment of the Tranche B facility, due on 31 May 2016. The Tranche B principal amount totals US$80m plus rolled-up interest, and, according to the current schedule, repayments should be due quarterly hereafter. We estimated that the initial two payments on the facility (May and October) to have a quantum of approximately US$3m, before ramping up to a run rate of ~US$6m. Whilst we understand operational targets continue to be achieved at Tschudi, the company has indicated that the repayment deferment has been precipitated by ongoing revenue pressure from copper price headwinds; the commodity is currently trading down from its recent high of US$5,045/t at the end of April to US$4,700/t as today. Finalisation of the arrangement is underway, and we await additional detail regarding the revised repayment schedule in the near term.

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