ZUG, SWITZERLAND, Nov. 11, 2011 /CNW/ - Katanga Mining Limited (TSX: KAT; KAT.NT) ("Katanga" or the "Company") today announced the following:
Financial results for the third quarter of 2011. Katanga's Q3 2011
Financial Statements and Management's Discussion and Analysis will be
filed on SEDAR and later available under Katanga's profile at www.sedar.com.
Approval of the Updated Phase 4 Expansion (as described below) of its
copper cobalt project.
A commitment from Glencore International AG ("Glencore"), to provide up to $635.5 million in new loan facilities with an
interest rate of 10% per annum to fund the Updated Phase 4 Expansion
not covered by the Company's cash flows as well as to refinance the
Company's outstanding Canadian $115 million of 14% debentures (the "Commitment").
Highlights during the three months ("Q3") ended September 30, 2011
During Q3 2011, the Company mined 1,239,695 tonnes of ore at a grade of
4.29% resulting in contained copper in ore mined of 53,131 tonnes, 64%
higher than Q3 2010. For Q3 YTD 2011, copper in ore mined was 157,658
tonnes, a 96% increase from Q3 YTD 2010.
The annualized contained copper in ore mined for Q3 2011 was 212,000
tonnes and has allowed an increase in contained copper in strategic
stockpiles of approximately 21,000 tonnes (when compared to Q2 2011) in
anticipation of the current wet season.
Ore mined and hoisted at KTO Underground Mine for Q3 2011 was 398,474
tonnes, a 21% increase on Q3 2010. For Q3 YTD 2011, ore mined and
hoisted totaled 1,197,117 tonnes, an increase of 28% on Q3 YTD 2010.
Q3 2011 production was adversely affected by the planned shut-down of
the production shaft for seven days for the Koepe winder upgrade which
was successfully completed in September and production post the upgrade
has increased to budgeted levels.
A record of 841,221 tonnes of ore was mined at KOV Open Pit for Q3 2011,
313% above Q3 2010. This is equivalent to an annualized production
capacity of 3.4 million tonnes which is consistent with the 2013
production rate and the ramp up schedule as described in Katanga's
independent technical report dated March 31, 2011 (the "Technical Report"). The copper grade of ore mined from KOV Open Pit for Q3 2011 averaged
During Q3 2011, the Company continued to dewater Kamoto East pit and the
water level to date has dropped by 10.8 meters with 3.6 million cubic
meters of water having been removed. The Kamoto East pit dewatering is
expected to allow for more efficient and cost effective waste
management and the potential development of the Kamoto East resource
using underground mining methods.
Ore milled at KTC for Q3 2011 was 1,031,151 tonnes, an increase of 35%
from Q3 2010. For Q3 YTD 2011, ore milled at KTC was 3,005,936 tonnes,
an increase of 44% from Q3 YTD 2010.
The current milling capacity at KTC of 7.68 million tonnes of ore per
annum is sufficient milling capacity to support the Life of Mine Plan
through to 2014 described in the Technical Report.
Mill throughput during Q3 2011 was adversely affected by electrical
power disruption events and water management challenges which are being
addressed by the Company. Management has instituted processes to
minimize the impact of electrical power disruption events on
A 120,000 tonnes per annum concentrate filtration and bagging facility
was commissioned during Q3 and the Company continues to increase the
production of oxide concentrate for sale as a finished product.
Copper produced in metal and concentrate for Q3 2011 totaled 23,690
tonnes, an increase of 59% compared to Q3 2010.
Cobalt produced totaled 593 tonnes, a decrease of 30% compared to the Q3
2010. The decrease in cobalt production is in line with the lower
cobalt head grade of the KOV ore.
Production for Q3 2011 was adversely impacted by roaster maintenance,
the completion of the expanded oxide repulp system and the issues
Total sales for Q3 2011, were $129.3 million. The sales figure has been
adversely affected by an unrealized mark to market adjustment as at
September 30, 2011, of $23.4 million (using a copper price of $7,160
In addition, the sales value of oxide concentrate available to be
shipped but not invoiced as at September 30, 2011, amounted to
approximately an additional $57 million.
For Q3 2011, the Company generated a gross profit of $11.4 million, net
income of $20.6 million and cash generated from operating activities of
Cash and cash equivalents as at September 30, 2011, amounted to $57
C1 cash costs for Q3 2011 were $2.23 per pound of copper. C1 cash costs
per pound of copper are cash costs including mining, processing,
administration and refining, net of cobalt credits and is a non-IFRS
measure - refer to Non-IFRS measures in Katanga's Q3 2011 Management's
Discussion and Analysis.
Human Resources and Corporate
On September 22, 2011, the Company announced that Mr. Jeffrey Best, the
Company's Chief Operating Officer, had been appointed as the Chief
Executive Officer and Director of the Company to succeed Mr. John Ross.
On October 11, 2011, the Company announced the promotion of Itamar
Machado to the position of Chief Operating Officer.
On August 31, 2011, the Company announced that it has been continued to
the Yukon Territory from Bermuda effective August 31, 2011.
Updated Phase 4 Expansion of Katanga's copper cobalt project
Consistent with Katanga's completion of the Phase 3 expansion of its
project described in the Technical Report, Katanga commissioned a front
end engineering and early works report (the "Early Works Report"). The Early Works Report identified the following (collectively, the "Updated Phase 4 Expansion"):
an additional 100,000 tonnes per annum solvent extraction ("SX") plant,
over and above the 200,000 tonnes per annum SX plant described in the
Technical Report, to be constructed in front of the existing Luilu
Katanga reaching higher copper and cobalt production levels sooner than
the timelines described in the Technical Report;
an increase in expansionary capital expenditures from approximately $537
million as described in the Technical Report to approximately $635
million due primarily to the inclusion of the additional SX plant and
an in-pit crusher at KOV Open Pit; and
the increase of copper production to 270,000 tonnes per annum of LME
Grade A copper and thereafter the expansion of copper production to
310,000 tonnes per annum which the Company intends to proceed with
utilizing anticipated cash flows from operating activities.
Commitment for up to $635.5 million in New Loan Facilities
Katanga has received the Commitment from Glencore, or one of its Group
entities, to provide Katanga with new loan facilities of up to $635.5
million (the "Facilities"). Up to $120 million of the Commitment is being provided to Katanga
as a new term loan facility (the "Term Loan") to enable the refinancing of Katanga's outstanding Canadian $115
million 14% debentures due November 30, 2013 in accordance with the
provisions of Katanga's trust indenture dated November 20, 2006. The
balance of the Commitment is being provided to Katanga as a senior
secured credit facility (the "Senior Facility") to fund the Updated Phase 4 Expansion not covered by the Company's
cash flows. The Company's 75% interest in Kamoto Copper Company SARL
(which holds the copper and cobalt project assets) will be pledged as
security for the Senior Facility along with certain other assets of the
Company and its subsidiaries. As security for the Term Loan and
additional security for the Senior Facility, Katanga will agree, if a
Facility is in default, to complete a deeply discounted rights offering
with Glencore providing a standby commitment, to repay the Facility.
In the case of the Senior Facility, Glencore has agreed to exercise its
right to compel Katanga to complete the deeply discounted rights
offering prior to realizing on Glencore's other security.
The Facilities will mature on December 31, 2014 and interest will be
payable on any amount drawn under the Facilities at a rate of 10% per
annum. The Commitment and the Facilities are subject to, among other
things, final documentation being agreed and usual and customary
drawdown conditions being satisfied.
In addition to the benefits to Katanga of the Updated Phase 4 Expansion,
which the Facilities are expected to finance in part, Katanga expects
the Updated Phase 4 Expansion will improve copper recovery, utilize
existing under-utilized plant capacity, and allow Katanga to produce
LME Grade A copper and benefit from the continuity of personnel and
competencies involved in the recently completed Phase 3 expansion of
Katanga's Corporate Governance and Nominations Committee (the "Committee"), which is comprised of three independent directors, has reviewed the
proposed Facilities as contemplated by the Charter of the Committee.
The Committee retained Fasken Martineau DuMoulin LLP, independent legal
counsel, in connection with that review. Following that review, the
Committee has unanimously determined that entering into the Facilities
is in the best interests of Katanga.
Glencore beneficially owns, directly or indirectly, or exercises control
or direction over approximately 74% of the issued and outstanding
common shares of Katanga. Due to this relationship, the Facilities are
considered "related party transactions" as defined by Multilateral
Instrument 61-101 - Protection of Minority Security Holders in Special Transactions ("MI 61-101"). Katanga is relying upon the exemption from the requirement to
obtain majority of minority shareholder approval available under MI
61-101 as it has determined that neither the aggregate of the fair
market value of the Facilities, nor the fair market value of the
consideration for the Facilities, exceeds 25% of Katanga's market
capitalization as calculated and determined in accordance with MI
61-101. It is not anticipated that the Facilities will affect the
percentage of Katanga's securities beneficially owned or controlled by
Glencore has made the Facilities available in the ordinary course of its
business. It may from time to time acquire additional securities of
Katanga, dispose of some or all of the existing or additional
securities it holds or will hold, or may continue to hold its current
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. All dollar amounts are in United
States dollars unless otherwise indicated.
This press release contains "forward-looking information" within the
meaning of Canadian securities legislation under the headings
"Highlights during the three months ("Q3") ended September 30, 2011"
and "Updated Phase 4 Expansion of Katanga's copper cobalt project" with
respect to the Company's business, operations and financial performance
and condition, including the Company's refurbishment works associated
with the development program, the New Phase 4 expansion, anticipated
future capacities, project expansion opportunities and exploration,
development and production. Generally, forward-looking information can
be identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled estimates", "forecasts", "outlook", "intends",
"anticipates", "does not anticipate", or "believes", or variations of
such words and phrases or statements that certain actions, events or
results "may", "could", "would", "might", "will" or "will be taken",
"occur", or "be achieved". Statements containing forward-looking
information are based on the opinions and estimates of management as of
the date such statements are made, and they are subject to known and
unknown risks, uncertainties and other factors that may cause the
actual results, level of activity, performance or achievements of
Katanga to be materially different from those expressed or implied by
such statements, including but not limited to: risks relating to the
refurbishment of existing facilities; unexpected events during
construction, start-up, expansion or production; variations in ore
grade or tonnes mined; future prices of copper and cobalt; futures
prices of oxide concentrate; possible variations in ore reserves, grade
or recovery rates; failure of plant, equipment or processes to operate
as anticipated; political unrest and insurrection; acts of terrorism;
accidents, labor disputes and other risks of the mining industry;
delays in the completion of development or construction activities, as
well as those factors discussed herein or referred to in the current
annual information form of the Company filed with the securities
regulatory authorities in Canada and available at www.sedar.com. Although management of Katanga has attempted to identify important
factors that could cause actual results to differ materially from those
contained in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated or intended.
There can be no assurance that statements containing forward-looking
information 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
statements containing forward-looking information. Katanga does not
undertake to update any forward-looking information or statement that
is incorporated herein, except in accordance with applicable securities
This press release and the information forming the basis hereof was
prepared under the supervision of Tim Henderson, Technical Consultant,
Katanga and a 'Qualified Person' as such term is defined in National
Instrument 43-101. Mr. Henderson has reviewed and approved the contents
of this press release.
SOURCE Katanga Mining Limited
For further information:
| Jeff Best |
Tel: +41 (041) 766 71 10
| || Nico Paraskevas |
Tel: +41 (041) 766 71 10