Q&A: Big Tree Copper, SA’s only premium copper producer, gears up for listing

Burgeoning copper processor and exporter Big Tree Copper is targeting a stock-exchange listing in the first half of 2020. The CEO of Big Tree Copper, Jan Nelson, spoke to Business Day about the company’s restorative environmental cleanup efforts in the sandy, historic copper-mining town of Nababeep — a task that’s seen it become SA’s only pure copper producer.

Copper is the central material used in wiring and motors, as well as in different types of clean energy including wind and solar. And as consumers turn to more environmentally-friendly products such as electric vehicles, demand is growing for the irreplaceable and dwindling resource.

Big Tree touts itself as SA’s only pure profitable and sustainable copper offering through a process of cleaning up the environment.

What was the motivation for doing a restorative environmental cleanup in the Northern Cape?

The Northern Cape was once a prolific copper district producing more than $15bn worth of copper from over 30 mines. It was the logical place to go and look for more copper and we found it. We are removing old mine rock dumps left behind and processing them for copper and using the discard from our process, which we neutralise to fill up old mining excavations.

By processing the old material we make money and do not leave more waste behind. We reduce our costs base so it is developed by cleaning up the environment. We actually made good money and did the right thing for both the planet and the local area and community.

What do the costs associated with environmental rehabilitation look like?

About $4 to $8 per tonne of rock processed.

Why did management take money from their own pockets to start the business?

We believe in the business concept and production approach.  With the board and executive owning some 60% of this business, we believe that having skin in the game keeps people focused. That is why we are also structuring a share scheme for the community so that they too can benefit from our efforts and assist us too. We have raised and invested $2.6m … we then raised an additional $3.4m.

On the balance sheet, how much debt does Big Tree have?

We have virtually no debt.

Why does the company want a stock-exchange listing?

Our current operations are 100% equity funded but we have growth ambitions for the business and that will require more capital, and a listing will provide the platform to raise more capital. Factors that are going to determine where we list are access to capital and a market that understands and supports our business.

You mentioned a R100m capital raise: what would the company be looking to do with the money, and where would the biggest chunk of the funds come from?

We have a pipeline of exciting growth projects within 10km of the plant that would require additional funding, and grow our current annual copper production from 1,500 tonnes of copper to more than 8,000 tonnes of copper per year.

We believe that we could raise about R100m through a domestic listing on a stock exchange. We would look to market the company to local fund managers and high net worth retail investors.

Is Big Tree Copper competing with the global giants of copper?

We are the only pure copper production company in SA, with agreements in place for 100% offtake. And 30% of our workforce are women and all of the workforce have been sourced from the local community.

What are the risks associated with running a business operation such as yours?

We have de-risked the plant in that it is producing copper now. We have our own workshop which can maintain and fix everything on the plant and we employ people from the community and upskill them, so the community is invested in our future.

We are profitable and our ongoing capital requirements for the current production is low, with 100% offtake agreements in place. Our permits and licences are in place, water and power are secured and we have an experienced and mature management team and supportive board. I would say a risk is getting funding for our growth ambitions.

You spoke of pushing up your output: what is driving demand for your product? 

We have an offtake agreement with Noble Metals. The demand is driven by a world deficit of almost 10-million tonnes per year in the demand and supply chain.

What is the impact on customers if copper runs out?

No electricity, electric reticulation, electric vehicles — in short, a more polluted world with no electrical infrastructure, devoid of technology. 

Can you elaborate on your share incentive for the surrounding community?

We will be issuing 15% of the company to our workers and the local community. 

gumedemi@businesslive.co.za