Wednesday brought good news for Australian mining company Sandfire Resources (ASX:SFR) as Botswana granted the company a mining license for its Motheo copper project in the Kalahari Copper Belt. The project is coming close to finalized permitting now, as this was one of the two major conditions before moving forward on the $208 million project. 

Initial site works for the project began earlier in 2021 that included sterilization drilling, building a 15km access road to improve infrastructure, and the construction of a critical 200-person camp that will house workers and their families in some cases. 

Next steps include bringing more staff on-site as the company begins construction of the process plant and other key infrastructure. Jobs created from the construction alone are expected to be a major boost to the local economy. Orders have also been placed for all key process equipment and long-lead items in preparation for the launch of the project. “We are absolutely delighted to now be in a position to move to full-scale construction at Motheo. I would like to thank the Government of Botswana for their support throughout the approvals process, which will see Motheo come on-stream in 2023 as one of very few new copper mines commencing production globally,” managing director and CEO Karl Simich said in a statement.

A Long-Term Play

The mine will be developed over a two-year period. Mining is planned to start in 2022 and the company plans to ramp-up operations for early 2023 as it approaches output that same year. 

Simich said, “Motheo is expected to generate approximately 1000 jobs during construction and 600 full-time jobs during operations, and represents the foundation for Sandfire’s long-term growth plans in Botswana. Our vision is that Motheo will form the centre of a new, long-life copper production hub in the central portion of the world-class Kalahari Copper Belt, where we hold an extensive ground-holding spanning Botswana and Namibia. Sandfire is looking forward to becoming a major long-term player in the Kalahari Copper Belt, which represents one the last under-explored large-scale copper provinces anywhere in the world.”

Big Production to Help Botswana Diversify Exports

The company expects the mine to produce for 12.5 years, generating an approximate $664 million in pre-tax cash flows and $987 million EBITDA over the first ten years of operations at a calculated cost of $1.76 per copper pound. The project is set to launch during a time when copper demand is soaring and a lack of new copper projects gives companies opening new mines a big advantage in the market. Sandfire realizes this and is moving swiftly to capitalize on the seemingly perfect timing of their new project.

The open pit mine is expected to produce 3.2 millions tonnes a year. Botswana is a diamond-heavy mining jurisdiction, and the country relies on the gem for 70% of the nation’s export revenue. This project would be a step toward reducing its dependence on diamonds and diversifying its exports. 

The above references an opinion and is for information purposes only. It is not intended to be investment advice. Seek a licensed professional for investment advice. The author is not an insider or shareholder of any of the companies mentioned above.