A junior mining group is boldly entering the ‘mining majors’ territory. Bronwen Jones reports
MINING company Metorex normally keeps a low profile, but its bold moves as the only South African junior to tender and pre-qualify for the Zambia Consolidated Copper Mines’ privatisation mark it out as unusual.
With a stack of tender documents piled on his desk, Simon Malone, chief executive of the 21-year-old firm, said: ‘We’re thrilled that we’ve pre-qualified.’
There appears to be only one ingredient missing. ‘Now we must find an English metal trader that wants to throw a whole gob of money into the copper belt.’
The company is interested in two areas. One is Kansanshi and the other, with its high-grade copper deposit, has to remain confidential at this stage. Metorex has tendered for both prospects in partnership with exploration companies Randex and Afriore.
Five different companies have tried to mine one of these Zambian prospects, but it was closed every time. Nonetheless, Metorex is entirely convinced it can succeed where others have failed.
Malone says the super oxide copper ore deposit is ‘suitable for a junior with imaginative financing’. It would be operated by a solvent extraction electro-winning process. The 15- to 20-million ton prospect has 2,2% copper and a predicted life of some 15 years.
The attraction of Zambia lies in a whole list of promises from the government: from free-market policies to liberalised interest rates, abolition of exchange controls and a commitment to 15 years of unchanged tax and foreign exchange policies. The government has privatised 130 companies in the past two years, and many with South African investment are doing exceptionally well.
In addition to its Zambian aspirations, Metorex has many other irons in the fire. Most notable is its intention to seek a base metals listing on the Johannesburg Stock Exchange in the first quarter of 1997.
To do this, the company is expected to reverse the high-grade Maranda mine into the Rooiberg Tin cash shell, which comes complete with some 300 shareholders.
Maranda mine is located 15km west of Gravelotte, in the hills of the Northern Province’s zinc and copper-rich Murchison Range. Metorex has managed the mine since 1991. ‘Following the discovery of the ‘Romotshidi deposit nearby, Maranda’s life is guaranteed well into the next century.
In addition, Metorex holds options and rights over a distance of 100km in the ‘Murchison belt’, where it is confident of finding further valuable deposits. A prospecting agreement has already been signed over the Letaba copper zinc mine 40km east of Maranda.
Maranda is owned by Metorex, Mercantile Bank, the Industrial Development Corporation, Randex and two syndicates.
The mine employs 300 people, mainly from the local community. ‘It has a 215m deep shaft from ‘which 6 500 tons of ore a month ‘are taken. It is the highest grade base-metal mine in South Africa and produces 15% of the entire zinc ‘concentrate production for the country. The zinc is sold on to Zimcor ‘and the copper to O’Okiep Copper Company in Namaqualand.
>From other operations, Metorex sells manganese dioxide to Anglo American and Anglovaal.
Towards the end of next year, Metorex is also looking to list a coal junior. It took over what Malone describes as ‘the debacle of the Side Minerals’ coal project, which took a year to get into a respectable condition’. The plant is now operating at design capacity and a significant ‘big brother’ is to become involved. Malone would not be drawn on the nationality of the expected investors.
Metorex’s other coal interests include Leeuwfontein Mine and Bankfontein Opencast mine.
With its headquarters in downtown Johannesburg, Metorex is entirely South African, but it has operations in all of Southern Africa’s immediate neighbours.
Malone feels that Metorex is in a unique position in South Africa, particularly with its base-metals expertise. Apart from a host of small diamond mining organisations, ‘there is no interest in juniors in this country’, says Malone. ‘Even the geology of the country is against it.’ But he believes: ‘The time of the juniors is coming.’
Financially, the time may not be quite right, because there is a perception in the market ‘that juniors are a bunch of skelms (crooks) and profiteers’, Malone says. But the majors are going offshore, leaving a void in development. He adds: ‘Structurally the country, the industry, has got to change and it is now changing.’
A junior is a company which usually takes on projects of less than ‘R50-million, employs less than 500 people and is not technologically complex. Juniors in opencast mining might move 60 000 to 70 000 tons of ore a month or, in underground operations, only some 10 000 to ’15 000 tons a month