ReconAfrica ditches Mexico operations to focus on Namibia

Canadian company ReconAfrica has closed its operations in Mexico after the sale of its subsidiary was recently concluded, shifting the focus to its exploration and drilling activities in north-eastern Namibia and northern Botswana.

This was confirmed by the company’s spokesperson Ndapewoshali Shapwanale on Tuesday.

“As our chief executive officer (CEO) has stated, the company has closed the sale of its Mexico operations. We have always been committed to exploring the Kavango sentiment basin.

“Earlier this year, we received our environmental clearance certificate (ECC) for the drilling of multiple exploration and appraisal wells and we have also been granted approval for our second renewal exploration period by the Ministry of Mines and Energy,” said Shapwanale.

She said the second renewal period covers from 30 January 2024 to 29 January 2026.

“As a forecast for 2024, we look forward to our next drilling campaign which is targeted for the first half of the next year. All this development will follow the successful completion of our three stratigraphic wells that were drilled and our 2D symmetric data and our advanced full gravity acquisition data programme,” said Shapwanale.

The company’s new CEO, Brian Reinsborough, told Proactive, a financial news and online broadcast agency with offices in Toronto, Canada, that the company has completed a comprehensive technical evaluation of its entire exploration inventory, focusing on the oil-prone Rift Basin and Damara Fold Belt gas plays.

He said the evaluation aims to better understand the potential of the areas and ReconAfrica’s exploration teams have selected the first two drill locations and have initiated the necessary preparations for well site set-up and procurement for drilling operations.

Reinsborough said the successful sale of its Mexico operations will help streamline the company’s balance sheet, allowing it to remain fully focused on its exploration efforts in Namibia and Botswana.

In July, the company raised N$133 million to fund its exploration activities in Namibia after civil society organisations pleaded with international investors to stop pumping money into the exploration company.

ReconAfrica tried to raise N$110 million (US$6,5 million) on 27 June through the Toronto Stock Exchange to explore 12 oil wells in the Kavango East and West regions.

The company says it ended up raising N$133 million (US$7,4 million).

ReconAfrica’s management has been facing investor pressure due to its substantial spending of over N$445 million on three test wells which have failed to yield commercial oil since 2021.

The company has obtained an ECC from the Ministry of Environment, Forestry and Tourism, permitting it to drill 12 additional exploration wells from 4 July this year to 4 July 2026.

ReconAfrica has remained tight-lipped on its alleged financial challenges and issues involving foreign staff. And with changes in operations, it has declined to directly address apparent layoffs and financial issues.

With mounting debt, and about N$986 million (in 2022) left in cash from investors, there were doubts about whether ReconAfrica’s management would be able to afford its activities.

ReconAfrica has promised Namibia development and shareholders riches.

Clarifying the issuance of the ECC to ReconAfrica earlier this year, environmental commissioner Timoteus Mufeti said the issuance of the ECC was done by the law.

He says the environmental commissioner’s office must ensure that identified and listed economic activities are cleared for possible environmental impacts.

“On this basis, to date, Namibia has managed its environmental matters very well and the trend will continue into the future,” said Mufeti.

“Consultation activities were undertaken in January and February, focusing on the interested and affected parties and local communities, including land-owners and traditional authorities,” he said, expressing a conviction that the potential negative impacts to the local individual drilling sites will be low, manageable and can be mitigated.