Hong Kong-based Chinese mining group Xinhai has agreed to fund the development of African Pioneer’s Ongombo-Ongeama copper project near Windhoek.
The agreement, announced this week, sees Hong Kong Xinhai Mining Services Limited sign a non-binding term sheet with African Pioneer Plc under which the Chinese engineering and mine development group would provide financing, engineering, construction and commissioning services for the project located about 30 kilometres from Windhoek.
If converted into definitive agreements, Xinhai would fund 100% of the capital required to achieve agreed development milestones, covering everything from further exploration and resource expansion to mine construction and commissioning.
The arrangement marks a major shift for African Pioneer, which has been seeking a pathway to move the Ongombo-Ongeama project from resource development towards commercial copper production without relying on repeated equity raisings.
Under the proposed structure, Xinhai would subscribe for a 10% stake in African Pioneer at 1.15 pence per share and provide project financing through a secured loan facility.
The financing could ultimately result in Xinhai acquiring up to approximately 74% of the project holding company, giving the Chinese group a significant ownership position in the mine.
African Pioneer chairman Colin Bird said the objective was to create a single integrated framework covering project evaluation, financing, engineering, construction and commissioning.
“This financing and services agreement will make it possible for African Pioneer to fast-track Ongombo-Ongeama towards commercial copper production,” Bird said.
Xinhai is one of China’s better-known mining engineering and EPC contractors and says it has completed more than 500 engineering, procurement and construction projects globally, including mine construction, mineral processing plants and operational management assignments.
The company has been granted an exclusivity period of up to 60 days to negotiate definitive agreements with African Pioneer, after which the full financing terms will be disclosed.
Although the announcement significantly advances the project’s development prospects, neither company has yet announced a mine construction start date or a target date for first copper production.
The parties instead said they would focus on completing development milestones and finalising definitive agreements before publishing a detailed implementation schedule.
