Deep-South Resources CEO Pierre Leveille (PL) told The Extractor Magazine (TEM) that the mines ministry’s refusal to renew Deep-South Resources’ licence for the Haib Copper mine cost the company N$2,7 million in legal fees and caused a two-and-a-half-year delay.
TEM: Can you briefly describe Deep-South as a company—stakeholders, formation, and current financial position?
PL: Deep-South Resources is a Canadian company listed on the TSX Venture Exchange (TSX-V). Deep-South holds 100% of Haib Minerals (PTY) Ltd. Haib Minerals holds 100% of the Haib copper exploration licence. Deep-South also has the option to acquire up to 85% of three exploration licences in the heart of the Copperbelt in Zambia.
The largest shareholder of Deep-South, with 16% of the share capital, is Teck Resources (the largest diversified Canadian mining company). Management and some directors hold about 12% of the share capital. The balance of 72% is spread among the public (about 300 shareholders). We have about N$5 million in cash.
TEM: When and how did Deep-South come to Namibia to invest in the Haib copper mine?
PL: A group of Canadian investors and myself, with some Namibian investors, acquired all the shares of Deep-South Mining Company (PTY) Limited in 2016. Deep-South Mining is a private Namibian company holding 30% of Haib Minerals. The balance of 70% has been held by Teck Resources since 2008. Teck was controlling and operating the exploration of the project. Deep-South Resources was listed in September 2016 with a 30% interest in Haib Minerals as a first asset. Deep-South then acquired the remaining 70% from Teck.
TEM: Can you share the transaction Deep-South entered into regarding acquiring the Haib mine?
PL: The transaction to acquire the share of Teck was evaluated at CAD$5.4 million (N$50 million). Paid with 22 million shares of Deep-South Resources and CAD$948,000 (about N$10 million) in cash.
TEM: When and how long did Deep-South wait for the Haib licence to be approved by the ministry?
PL: I am not certain I understand your question. Exploration licenses are renewable every two years, and in general, it takes about 3 to 4 months after the expiration to get the renewal approved.
TEM: What did the licence require Deep-South to do at the Haib mine?
PL: The licence conditions are that we have to start and adhere to the exploration program we have proposed to the ministry at the renewal. In general, we have completed the work program proposed, and for the first four years, we even invested N$8 million more than our original proposal.
TEM: What was the state of Haib mine when Deep-South acquired it?
PL: As explained above, this is not a mine, so there was no operation, no equipment running, and no employees. We have acquired all the historical exploration data completed over time by companies such as Rio Tinto, Teck Resources, Venmyn Rand, and others. That included drilling data (66,000 meters of drilling), geophysical survey data, mapping mine modelling, resource estimation reports, a feasibility study, etc.
TEM: What improvements had Deep-South undertaken at the Haib mine when the ministry refused to renew the licence?
PL: We did not have to make any improvements because this is not a mine. We had proposed to complete a feasibility study to apply for a mining license within 30 months after the renewal. The budget was N$81 million for the 30 months, comprising drilling, resource estimation, metallurgical test work, engineering design, feasibility report, etc. It was refused. We know why today, and it had nothing to do with our proposal. It was the same attempt that had been made with the lithium project involving Orange River Mining and the Chinese company Xinfeng Investments.
TEM: How much did the court case cost Deep-South?
PL: N$1.5 million for the legal fees in Namibia and about N$1.2 million for the legal fees in Canada and Europe. As we are listed in Canada, the USA, and Germany, we also had legal costs for legal advice in those countries. So, the total was about N$2.7 million.
TEM: What is your view of Namibia’s refusal to renew the licence and the court verdict?
Namibia is still one of the best countries in Africa for mining. I have been doing business in Namibia since 1996. I have lived in Namibia with my family. My children have started school in Namibia. Namibia is my second home. The problem we have lived with is related to the corruption of senior officers at the ministry, which is not generalised in Namibia. This kind of problem can happen in any country in the world. The crucial point is that Namibia respects the rule of law, and in our case, it has prevailed.
TEM: Would you recommend another company to invest in Namibia after the Haib case?
PL: Yes, I would recommend Namibia. My explanation above is quite clear.
TEM: In terms of development, considering that the case took about two years, how far behind is Deep-South at the Haib mine?
PL: We are two and a half years late. It took two years for the court case, and during this period, there was no security or maintenance on-site. This lack of activity has degraded the roads on site, and the infrastructure has been scavenged and seriously damaged. So, it will take us three to six months to return to the level we left the site at two years ago.
TEM: Now that the licence has been renewed, what are Deep-South’s priorities at Haib?
PL: Resume the program to complete feasibility as soon as possible and file for a mining license within 24 to 36 months. The program comprises drilling, resource estimation, metallurgical test work, engineering design, feasibility report, etc.
TEM: Who runs Deep-South’s subsidiary, Haib Minerals?
PL: I run the Haib with my colleagues and directors. The chairperson is Ally Angula. Mary Barton is a technical consultant, and Julia Kamwi is our management assistant. Greg Adams is our field technician.
TEM: How many workers does Deep-South employ?
PL: There are only eight people, but we will hire Namibians as soon as we resume the operation. When the ministry denied the licence renewal, we employed about 45 people.
TEM: Can you share Deep-South’s ESG?
PL: Our ESG was being drafted when we lost the licence. Therefore, it has not been completed. Now that we have the licence back, we will resume the creation of our SEG, and I will be happy to share it in due course.
