ZUG, SWITZERLAND, March 29, 2012 /CNW/ - Katanga Mining Limited (TSX: KAT) ("Katanga" or the "Company") is pleased to announce that it has secured development of power supply sufficient to meet the future needs of its copper and cobalt mine complex in the Democratic Republic of Congo ("DRC").
The Company has concluded agreements with Société Nationale d'Électricité ("SNEL"), the DRC's national electricity company, and engineering contractors to refurbish DRC power generating, transmission and distribution systems (the "Power Project") that should progressively increase power available to Katanga's mine complex and the nearby Mutanda and Kansuki projects owned by companies affiliated with Katanga's parent company, Glencore International, to 450 MW by the end of 2015.
Katanga believes power availability to its mine complex through 2015 will be more than sufficient to support its operational requirements in 2012 and beyond as the Updated Phase 4 Expansion to take production to 310,000 metric tonnes per annum by 2015 (as previously announced) is implemented.
Approximately 10 percent of the additional power is generally expected to be surplus to the power requirements of Katanga's mine complex and the Mutanda and Kansuki project requirements and so will be available for SNEL to distribute. Improvements in infrastructure should improve the reliability and stability of electricity supplies generally.
Some key terms of the agreements are as follows:
- The Company will fund USD 283.5 million for the Power Project commencing from the second quarter of 2012 to the end of 2015 but will be reimbursed USD 189 million by its affiliates who own the Mutanda and Kansuki projects. Accordingly, Katanga's funding contribution will be USD 94.5 million.
- USD 261.8 million of this amount will be reimbursed by SNEL ("Debt Amount") via credits to power bills payable by the Company and its affiliates.
- Interest will accrue at 6 months LIBOR + 300 bps on the Debt Amount from date of drawdown to date of reimbursement.
- The Power Project will be managed by a Technical Committee including representatives from the Company, its affiliates, the appointed EPCM contractor and SNEL.
- An additional component of the power bills payable by the Company and its affiliates will be set aside to be used to maintain the facilities after commissioning.
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 statements relating to refurbishment of the power generating, transmission and distribution systems in the DRC and that such refurbishment will result in sufficient power for the Company and its nearby projects in 2012 and beyond. 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.
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, completion of the refurbishment of the power generating, transmission and distribution systems; 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, 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.
For further information:
Tel: +41 (041) 766 71 10
Tel:+41 (041) 766 71 10