Cradle Arc has made an application for placing its subsidiary Leboam Holdings into provisional liquidation.
Leboam Holdings is the holding company of the Mowana copper mine in northeastern Botswana.
As parallel talks on securing an alternative funding arrangement for the operations continue, the company moved the Botswana High Court so it could undertake the provisional liquidation.
The court will hear the company’s application on 19 December.
Earlier this month, Cradle Arc disclosed that the loan negotiations between Leboam and Fujax Minerals and Energy hit a roadblock.
To ensure it make further drawdowns, Fujax placed a condition that requires Leboam to agree to alter the previously agreed terms and grant security over its interest in the Mowana mine for debt owed to Fujax.
As a result of working capital constraints, mining operations at Mowana were suspended at that time.
Fujax and Leboam’s 40% shareholders have separately approached the high court to consider placing Leboam under judicial management or alternatively placing it under provisional liquidation. This application is up for hearing on 18 December.
Cradle Arc has stated that it is not in favour of placing the company under judicial management as there is no viable alternative financing plan for Leboam.
Cradle Arc CEO Kevin van Wouw said: “While it is unfortunate that we have had to take this step, provisional liquidation, as opposed to final liquidation, is by no means the end for Mowana, but rather provides the company an opportunity to continue talks, along with the provisional liquidator, for a sustainable funding solution at the mine.”
According to the company, remedial action has been performed on the process plant and other associated infrastructure at the mine.
Located around 120km northwest of Francistown, the Mowana mine has a production capacity of 12,000tpa of copper.