Katanga Mining announces 2014 second quarter financial results
Aug 08, 2014, 08:00 ET
ZUG, Switzerland, Aug. 8, 2014 /CNW/ - Katanga Mining Limited (TSX: KAT) ("Katanga" or the "Company") today announces its financial results for the second quarter of 2014. Katanga's Financial Statements and Management's Discussion and Analysis will be filed on SEDAR, www.sedar.com.
Highlights during the three and six months ended June 30, 2014, and Outlook
- During the three months ended June 30, 2014 ("Q2 2014"), the Company mined a record 2,014,017 tonnes of ore, a 2% increase over the three months ended June 30, 2013 ("Q2 2013"), at a grade of 3.84% resulting in contained copper in ore mined of 77,345 tonnes. During the six months ended June 30, 2014 ("H1 2014"), the Company mined 3,344,908 tonnes of ore, an 8% increase over the six months ended June 30, 2013 ("H1 2013"), at a grade of 3.92% resulting in contained copper in ore mined of 130,981 tonnes.
- Ore mined at KOV Open Pit during Q2 2014 was 1,509,804 tonnes, a 2% decrease from Q2 2013. The average copper grade of ore mined from KOV Open Pit during Q2 2014 was 4.05%, resulting in contained copper in ore mined of 61,115 tonnes. Waste mined at KOV Open Pit during Q2 2014 was 9,159,252 tonnes, a 52% increase over Q2 2013. Ore mined at KOV Open Pit during H1 2014 was 2,359,656 tonnes, a 4% increase over H1 2013. The average copper grade of ore mined from KOV Open Pit during H1 2014 was 4.18%, resulting in contained copper in ore mined of 98,745 tonnes. Waste mined at KOV Open Pit during H1 2014 was 15,148,828 tonnes, a 31% increase over H1 2013. Total volume increase was attributed to the addition of 4 new Caterpillar 793D haul trucks in Q2 2014.
- Ore mined at KTO Underground Mine during Q2 2014 was 504,213 tonnes, a 17% increase over Q2 2013. The average copper grade of ore mined from KTO Underground Mine during Q2 2014 was 3.22%, resulting in contained copper in ore mined of 16,231 tonnes. Ore mined at KTO Underground Mine during H1 2014 was 951,614 tonnes, a 14% increase over H1 2013. The average copper grade of ore mined from KTO Underground Mine during H1 2014 was 3.31%, resulting in contained copper in ore mined of 31,505 tonnes. Total volume increase was primarily due to higher stope availability resulting from increased backfilling and development.
- At T17 Open Pit, during H1, 2014, 30,362 tonnes of waste and 33,638 tonnes of ore were mined at an average copper grade of 2.17%. The ore and waste removed will facilitate ongoing infrastructure works which commenced in Q1 2014, related to the T17 Underground Mine.
- At T17 Underground Mine in development, during H1, 2014, 14,310 tonnes of waste and zero tonnes of ore mined. Total cumulative advance in primary development is 118 metres.
- In Q2 2014, the Company commissioned:
- Four new Caterpillar 793D haul trucks operating in KOV to increase ore and waste mining capacity and reduce contractor dependency;
- Shaft 2 winder upgrade at KTO; and
- Six Caterpillar AD45 underground mine trucks, this equipment is expected to accelerate development, whilst reducing contractor dependency.
- Additionally, in H1 2014, the Company commissioned a further:
- Three new Atlas Copco MT436B haulage trucks for waste at KTO with this equipment expected to accelerate development, whilst reducing contractor dependency and overall haulage and backfill costs; and
- Two new Caterpillar 992K loaders and two Caterpillar drill rigs at KOV, to increase loading capacity and reduce dependency on contractor primary and secondary drilling.
- Ore milled at the Kamoto Concentrator ("KTC") during Q2 2014 was a record 1,527,708 tonnes, an 11% increase over Q2 2013. Ore milled at KTC during H1 2014 was a record 3,041,924 tonnes, a 16% increase over H1 2013.
- In Q2 2014, 187,357 tonnes of concentrate (13% higher than Q2 2013) containing 43,107 tonnes of copper (14% higher than Q2 2013) were produced. In H1 2014, 348,344 tonnes of concentrate (11% higher than H1 2013) containing 79,422 tonnes of copper (11% higher than H1 2013) were produced.
- Copper produced in metal and concentrate for Q2 2014 totalled a record 41,026 tonnes, a 30% increase over Q2 2013. Copper produced in metal and concentrate for H1 2014 totalled 72,600 tonnes, a 20% increase over H1 2013.
- Cobalt metal produced totalled 523 tonnes for Q2 2014, a 25% decrease from Q2 2013. Cobalt metal produced totalled 1,001 tonnes for H1 2014, a 2% decrease from H1 2013.
- In Q2 2014, the Company commissioned:
- KTC reagent preparation plant and dosing and distribution systems, improving recoveries and decreasing costs;
- Lime and sodium-metabisulfite plants at Luilu refinery, improving cobalt precipitation and overall cobalt recovery;
- Roaster line 2 at Luilu refinery, adding additional sulphide roasting capacity; and
- Diluent storage facility, improving cost control.
- As part of the Updated Phase 4 Expansion Project (which is set out in the 2012 ITR – refer to item 16), the final train of the Solvent Extraction ("SX") plant increasing SX plant capacity to 300,000 tonnes per annum ("tpa") of copper transfer was commissioned during Q2 2014.
- During Q2 2014, Phase 5, which includes EW3 (2 x 30,000 tpa capacity EW tankhouse units) and CM5 (mill of 11,700 tonnes per day nameplate capacity), continued to progress in line with expectation, $112.2 million having been spent to date. For CM5, all the major components are on site and assembly is progressing according to schedule. Phase 5 is expected to be completed during Q4 2014.
- The T17 Underground Mine development continued during Q2 2014 with the following progress:
- Portal and interim mine services have been established;
- Cumulative primary development advance is 118m;
- Purchase of initial mine fleet; and
- Engineering and procurement for key surface and underground infrastructure has commenced.
- Total sales for Q2 2014 were $305.2 million, a 49% increase over Q2 2013. Total sales for H1 2014 were $515.1 million, a 31% increase over H1 2013.
- The realised copper price for Q2 2014 was $3.14/lb, a 5% increase over Q2 2013, while the realised cobalt price was $11.84/lb, a 13% decrease from Q2 2013.
- For Q2 2014, the Company earned a net income attributable to shareholders of $41.46 million, an increase of $26.9 million from Q2 2013. For H1 2014, the Company earned a net income attributable to shareholders of $77.9 million, an increase of $33.2 million from H1 2013.
- C1 cash costs for Q2 2014 were $2.05 per pound of copper, a 21% improvement over Q2 2013. C1 cash costs for H1 2014 were $2.37 per pound of copper, a 15% improvement over Q2 2013. Refer to Non-IFRS measures in Katanga's Q2 2014 Management's Discussion and Analysis.
- Cash and cash equivalents as at June 30, 2014, amounted to $66.5 million (December 31, 2013 - $25.7 million).
- Operational ramp up is expected to continue with: the expected completion of the Phase 5 project in Q4 2014; identified operational improvements leading to higher metal recovery rates; and additional steps to mitigate ongoing power issues, all leading to further reductions in C1 costs as a result of increased volume.
- KOV fleet dispatch tracking system is planned to be deployed in Q3 2014, and is expected to increase control over tracking and dispatch of open pit mobile equipment.
- During H2 2014, KTC plans to install a slurry analyzer which is expected to assist in rapid determinations of the mineral composition of the slurry before floatation, allowing a more precise and optimal reagent mix.
- During Q3 2014, the installation of a 10 megawatt diesel co-generation plant is expected to result in increased back-up generator capacity and decreased electricity availability issues.
- During H2 2014, the construction of two heap leach pads is expected to add further capacity for the treatment of low grade material.
- During H2 2014, additional pregnant leach solution and raffinate ponds are to be added to the current process flow at Luilu, in order to split the ponds into high and low grade solution which is expected to drive higher recoveries and lower reagent consumption in the leach and neutralisation phase.
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 increase in copper and cobalt production levels, the completion of the Phase 5 Project and the expected benefits derived there from, the expectation that improvements at KOV will increase ore and waste mining capacity, reduce contractor dependency, accelerate development and reduce cost, the expectation that the deployment of the fleet dispatch tracking system at KOV will increase control over tracking and dispatch of open pit mobile equipment, plans to install a slurry analyzer at KTC, the installation of a 10 MW diesel co-generation plant, which is expected to result in increased back-up generator capacity and decreased electricity availability issues, the construction of two heap leach pads, the installation of additional pregnant leach solution and raffinate pond at Luilu, with the expected result of higher recoveries and lower reagent consumption, the expectation the new waste trucks at KTO will accelerate development, reduce contractor dependency and overall haulage and backfill costs, and the ongoing development of T17 Underground Mine. 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: there being no significant disruptions affecting the operations of the Company whether due to labour disruptions, supply disruptions, power disruptions, 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 the completion of the Phase 5 Project, the T17 Underground Mine and the Power Project; the successful completion of, and realizing the intended benefits from the Updated Phase 4 Expansion Project, the Phase 5 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.
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, CEO, Tel: +41 (041) 766 71 10; Jacques Lubbe, CFO, Tel: +41 (041) 766 71 10
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