Australian-listed miner Discovery Metals has placed the development of its Zeta underground mine in Botswana on hold.
The miner said last week that a proposed A$25.7-million rights issue, which was announced at the start of September this year, would not proceed, after the company’s lenders claimed a breach.
The copper miner announced that it provided lenders with an updated development plan and financial model for review as required by the Business Plan condition.
The company said on Thursday that it received a notice of breach from lenders stating that the updated Business Plan was not in a form and substance satisfactory as required under an Amended and Restated Facility Agreement.
“The lenders have reserved their rights,” Discovery Metals said in a statement. “The proposed renounceable rights issue announced on 1 September 2014 will now not proceed in the form and timeframe announced. Therefore, the development of the Zeta Underground Mine is on hold.”
In the interim the company will continue to operate the open cut operations at Zeta and Plutus, which delivered record copper production in July and August, while it continues to engage in discussions with its lenders regarding future options.
Discovery was granted government approval to develop the Zeta underground mine in April this year. At steady levels, the Zeta underground mine would produce about 1.5-million tonnes a year, at 1.3% copper.
Shares in the company will remain suspended from trading until 31 October 2014 pending finalisation of discussions with the Company’s Lenders.