A-Cap Energy puts the Botswana Letlhakane Uranium Project on hold

A-Cap Energy Limited (ACAP.bw) 2019 Annual Report

We have extracted the Chairman’s Statement from the 2019 annual report for A-Cap Energy Limited (ACAP.bw), listed on the Botswana Stock Exchange:

In late 2018 the Company entered into an agreement with Blackham Resources Limited to develop the Wilconi Ni-Co Project in Western Australia. Details of the joint venture are contained in the Operations Report. The Botswana Letlhakane Uranium Project has been largely put on hold pending an increase in uranium prices. The strategy referred to in last year’s Annual Report was to diversify into other commodities, and your Company’s move into battery related minerals, specifically nickel and cobalt, is in line with our energy related strategy. Both of the Company’s projects are situated in stable countries which is necessary for high tonnage, long life projects.

During the year most of the Company’s work has focussed on the Wilconi Ni-Co Project. As background to this move, I would like to explain the process that led to this decision as well as the objectives of our technical work.

Numerous marketing studies clearly spell out the future of the uptake of electric vehicles throughout the world. Batteries required to power these vehicles are made in mega-factories which are currently coming into production or are about to come on-line. Almost exclusively, these factories are being built to make lithium ion battery cells using two chemistries: nickel-cobalt-manganese (NCM) and nickel-cobalt-aluminium (NCA). RBC Capital Markets, Equity Research initiation Cobalt25 – January 2019 commented: “we forecast nickel-based chemistries used in EV’s rising to 80% by 2025, up from 60% in 20I8”. There is a predicted commodity deficit being forecast by many analysts, which means that new mines need to come on stream to fill this deficit.

The lead time to bring a battery mega-factory into full production is a similar time that it takes to bring a mine into production, and many of the newly planned mega-factories are already securing nickel and cobalt supplies via offtake agreements. A-Cap’s key strategic and commercial relationships will be pivotal to the Company’s implementation of its diversified minerals strategy. The Company intends to introduce the Wilconi Project to strategic product supply partners identified in Europe, China and the United States. With the clear vision of the future growth market for nickel and cobalt in mind, A-Cap has embarked on a logical strategy to bring the Wilconi Project through to production. The project has already 1,500 drill holes and over 45,000 assays done by previous operators. The recent work by your Company at Wilconi has been focussed on metallurgy and resource definition.

Most nickel-cobalt laterite deposits currently in operation utilise High Pressure Acid Leach (HPAL) as the main processing method. This highly efficient technology has generally been the legacy of earlier mining and processing and has very high capital cost. Whilst some of the planned new processing plants have opted for a HPAL process, early metallurgical work on the Wilconi ore shows that the ore responds well to atmospheric leaching processes. The highest single operating cost in the processing of lateritic ore is acid consumption, generally cause by high iron in the ore (typical of certain laterite horizons). A-Cap is currently evaluating a number of processes that do not require expensive high-pressure processes, but rather operate at atmospheric pressures, thereby lowering capital costs.

The operations section of this annual report tabulates the latest JORC (2012) figures. The diagram below shows the project pathway, with the Wilconi Project heading towards Scoping Study following the next round of drilling and metallurgy.

Your Company continues to work closely with the Botswana Department of Mines, the mining licence for the Letlhakane Uranium Project remains in good standing. In August 2019 the project’s programme of works was amended to delay planned construction activities for a further two years to more closely align forecasted uranium prices to our timeline to production. My thanks are also extended to Mr Tony Khama and the technical team in Botswana for their continued professionalism and technical support for the Wilconi Project as well as steering the Letlhakane Uranium Project through challenging times.

I wish to thank my Board colleagues for their commitment to your Company as well as our small team of hard working and supportive staff.

Finally, I wish to thank all our loyal shareholders for supporting the Company through a year of change for the Company

ANGANG SHEN
CHAIRMAN

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