Private equity firm Cupric Canyon Capital’s Khoemacau Copper Mines has signed deals to generate $565m in funding to start construction at its Khoemacau copper-silver underground mining project in Botswana.

The funding for the project includes a $275m senior debt facility from Red Kite Mine Finance, a $265m silver stream and a $25m subordinated debt facility from Royal Gold’s wholly owned subsidiary RGLD Gold (RG AG).

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Khoemacau Copper Mines will use the project funding package for construction of the 3.6 million tonne per annum starter project at Khoemacau.

The mine is expected to begin copper concentrate production in the first half of 2021, with initial annual production averaging 62,000t of copper and 1.9 million ounces of silver.

The project is expected to produce a copper concentrate with an average grade of about 40% copper and high-grade silver.

Over the past six years, Khoemacau Copper Mines has been developing the Khoemacau project, which covers 4,040km².

The project development plan involves the fully mechanised underground mining of sulphide ores at zone five using the Boseto processing facility for crushing, milling, flotation and production of a copper-silver concentrate.

“The deal reflects not only the quality of the mining environment in Botswana, but also the strong support of government towards foreign investment.”

Financial close for the project is set to occur in the second quarter of this year, with the production of the first concentrate expected in the first half of 2021.

Khoemacau Copper Mines CEO Johan Ferreira said: “Being able to commence the development of a large scale fully mechanised mine and deliver high-quality jobs and sustainable development in the Kalahari Copper Belt reflects not only the quality of the mining environment in Botswana, but also the strong support of government towards foreign investment and new mine development.”

In a separate deal, Royal Gold and RG AG signed an agreement with Khoemacau Copper Mining for purchasing silver produced from the Khoemacau project.

The company will buy 80% of the silver produced by making an advance payment of $212m and up to an additional $53m for the remaining 20%.