Katanga Mining Announces 2015 Year End and Fourth Quarter Financial Results, Adoption of New Corporate By-laws

ZUG, SWITZERLAND, Feb. 11, 2016 /CNW/ - Katanga Mining Limited (TSX: KAT) ("Katanga" or the "Company") today announces its financial results for the 2015 fiscal year and the fourth quarter. Katanga's Financial Statements and Management's Discussion and Analysis will be filed on SEDAR, www.sedar.com.

Highlights during the three months and year ended December 31, 2015, and Outlook







Three months ended

Twelve months ended



Dec 31,

Sep 30,

31-Dec

Dec 31,

 All figures USD


2015

2015

2014

2015

2014

Financial







Realized copper price*

$/lb

(4.35)

2.03

2.84

2.33

3.02

Realized cobalt price

$/lb

5.13

10.53

11.69

10.74

12.15

Total sales

$'000

(1,497)

202,006

262,931

669,701

1,078,510

 - including repricing*

$'000

(7,863)

(32,039)

(15,146)

(65,359)

(11,383)

EBITDA**

$'000

(78,138)

(133,162)

30,731

(285,697)

137,979

Net (loss) income attributable to shareholders

$'000

(123,371)

(188,193)

19,266

(424,064)

135,775

C1 cash costs**

$/lb

N/A

3.41

2.11

N/A

2.17

Cash flows from operating activities

$'000

(140,523)

(167,644)

49,606

(600,084)

220,691








* Negative price and sales amounts are a result of adverse repricing and mark to market ("M2M") adjustments


** Refer to item 21 Non-IFRS financial measures. Due to the suspension of production C1 cash costs are not calculated for this period.

 

Review of 2015 Fourth Quarter Results

  • Profitability during the three months ended December 31, 2015 ("Q4 2015"), when compared to the three months ended September 30, 2015 ("Q3 2015") and the three months ended December 31, 2014 ("Q4 2014"), was affected by:
    • Restructuring costs totalling $12.3 million relating to employee and contractor headcount reductions (Q3 2015 – 24.0 million);
    • A $30.6 million write-down of consumables inventory to net realizable value;
    • The cessation of borrowing cost capitalisation during Q1 2015 due to the completion of the Phase 5 Expansion Project, resulting in Amended Loan Facility interest expense of $73.5 million for Q4 2015 (Q3 2015 - $72.4m, Q4 2014 – nil);
    • Income tax recovery of $0.1 million in Q4 2015 (Q3 2015 - $0.2 million expense; Q4 2014 - $15.3 million recovery) due to the cessation of deferred tax recognition on tax losses carried forward in the DRC and incurred after Q2 2015.  Such recognition will be reassessed on commissioning of the Whole Ore Leach Project (the "WOL Project"); and
    • Profitability in Q3 2015 was negatively impacted to a greater extent by product inventory write downs and weak commodities prices.
  • Cash flows from operating activities decreased in Q4 2015, when compared to Q4 2014, due to the suspension of copper and cobalt processing at the end of Q3 and increased working capital requirements, notably for the reduction of accounts payable following the suspension of copper and cobalt processing.  These cash outflows were funded by Glencore AG, the Company's major shareholder ("Glencore").

Review of 2015 Year End Results

  • Profitability during 2015, when compared 2014, was affected by:
    • The suspension of copper and cobalt processing at the end of Q3, resulting in a sales volume variance of $222.0 million;
    • The decline in the copper and cobalt market price, resulting in a sales price variance of $186.8 million;
    • An $85.9 million write-down of product inventory to net realizable value driven by the copper price decline (2014 - $0.8 million);
    • A $36.3 million restructuring expense consisting of employee redundancy and supplier contract settlement costs;
    • A provision of $30.6 million in relation to the write-down of consumables inventory to net realizable value;
    • Costs being higher due to increased mining expenditure, increased processing costs at KTC and Luilu as a result of higher reagent consumption, and increased depreciation as a result of the enlarged asset base; and
    • The cessation of borrowing cost capitalisation in February 2015 following the completion of the Phase 5 Expansion Project, resulting in Amended Loan Facility interest expense of $240.1 million for the year.
  • Income tax recoveries were $111.3 million in 2015 (2014 - $145.5 million).  The decrease is due to the cessation of deferred tax recognition on tax losses carried forward in the DRC and incurred after Q2 2015. Such recognition will be reassessed on commissioning of WOL Project.

Cash flows from operating activities decreased in 2015 due to the decline in profitability and increased working capital requirements, notably due to increased inventories and decreased payables.  These cash outflows were funded by Glencore.

Separately, the Company announces that the Board of Directors has adopted a new By-Law No. 1 pursuant to the provisions of Business Corporations Act (Yukon) ("YBCA"), the Company's governing corporate legislation. The new By-Law No. 1 implements certain desirable updates stemming from amendments to the YBCA that came into force in 2015, as well as other clarificatory changes. The new By-Law No. 1 repeals and replaces the existing By-Law No. 1 of the Company in force since 2011 with immediate effect, and will be submitted to shareholders for ratification at the Company's next annual meeting of shareholders. A copy of the new By-Law No. 1 will be filed on SEDAR, www.sedar.com.

About Katanga Mining Limited
Katanga Mining Limited operates a major mine complex in the Democratic Republic of Congo producing refined copper and cobalt. The Company has the potential to become Africa's largest copper producer and the world's largest cobalt producer. Katanga is listed on the Toronto Stock Exchange under the symbol KAT.

Forward Looking Statements
This press release may contain forward-looking statements, including, but not limited to, the suspension of copper and cobalt processing, reductions in headcount and contractor demobilization process, the impact of newly acquired or commissioned equipment on operations, the ongoing development of T17 Underground Mine, the improvements related to the Whole Ore Leach Project, the expectation of resumption of production and the impact of the timing thereof, the impact of the new By-Law No. 1 and its ratification and the overall expected improvement of recoveries and grades. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.

All forward-looking statements reflect the Company's beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. All of the Company's forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions listed below. Although the Company believes that these assumptions are reasonable, this list is not exhaustive of factors that may affect any of the forward-looking statements. The key assumptions that have been made in connection with the forward-looking statements include the following: the operations of the Company during the production suspension and timeline for the recommencement of operations remaining consistent with management's expectations, there being no significant disruptions affecting the operations of the Company whether due to labour disruptions, supply disruptions, power disruptions, rollout of new equipment, damage to equipment or otherwise; permitting, development, operations, expansion and acquisitions at the Project being consistent with the Company's current expectations; continued recognition of the Company's mining concessions and other assets, rights, titles and interests in the DRC; political and legal developments in the DRC being consistent with its current expectations; the continued provision or procurement of additional funding from Glencore for operations, the completion of the T17 Underground Mine, the WOL Project and the Power Project; the successful completion of, and realizing the intended benefits from the WOL Project and the Power Project; new equipment performs to expectations; the successful development of the T17 Underground Mine; the exchange rate between the US dollar, South African rand, British pounds, Canadian dollar, Swiss franc, Congolese franc and Euro being approximately consistent with current levels; certain price assumptions for copper and cobalt; prices for diesel, natural gas, fuel oil, electricity and other key supplies being approximately consistent with current levels; production and cost of sales forecasts for the Company meeting expectations; the accuracy of the current ore reserve and mineral resource estimates of the Company (including but not limited to ore tonnage and ore grade estimates); and labour and material costs increasing on a basis consistent with the Company's current expectations.

Forward-looking statements involve known and unknown risks, future events, conditions, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, prediction, projection, forecast, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the actual results of current exploration activities; actual results and interpretation of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of copper and cobalt; possible variations in ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of exploration, development or construction activities, delays due to strikes or other work stoppage, both internal and external to the Company as well as those factors disclosed in the Company's current annual information form and other publicly filed documents. Although Katanga has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.

The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise, except in accordance with applicable securities laws.

SOURCE Katanga Mining Limited

For further information: Johnny Blizzard, CEO, Tel: +41 (041) 766 71 10; Matthew Colwill, CFO, Tel:+41 (041) 766 71 10

RELATED LINKS
www,katangamining.com

Custom Packages

Browse our custom packages or build your own to meet your unique communications needs.

Start today.

CNW Membership

Fill out a CNW membership form or contact us at 1 (877) 269-7890

Learn about CNW services

Request more information about CNW products and services or call us at 1 (877) 269-7890