Katanga Mining Announces 2015 First Quarter Results, Planned Modification to Production Process and Election of Directors

May 14, 2015, 09:09 ET from Katanga Mining Limited

ZUG, Switzerland, May 14, 2015 /CNW/ - Katanga Mining Limited (TSX: KAT) ("Katanga" or the "Company") today announces its financial results for the first quarter of 2015. Katanga's Financial Statements and Management's Discussion and Analysis will be filed on SEDAR, www.sedar.com.

Highlights during the three months ended March 31, 2015, and Outlook







Three months ended



March 31,

2015

December 31,

2014

March 31,

2014



Financial





Realized copper price

$/lb

2.51

2.84

2.96

Realized cobalt price

$/lb

10.54

11.69

11.89

Total sales

$'000

220,778

262,931

209,848

 - including repricing

$'000

(15,937)

(15,146)

(13,173)

EBITDA*

$'000

(41,878)

30,731

9,793

Net (loss) income attributable to shareholders

$'000

(28,431)

19,266

36,409

C1 cash costs*

$/lb

2.89

2.11

2.80

Cash flows from operating activities

$'000

(268,833)

49,606

60,601

Mining





Waste mined

tonnes

6,365,592

7,956,147

6,136,002

Ore mined

tonnes

1,848,269

1,863,967

1,330,891

Average copper grade

%

3.57

4.22

4.03

Contained copper in ore mined

tonnes

65,907

78,606

53,636

Processing





Ore milled

tonnes

1,975,903

1,722,177

1,514,216

Finished copper cathode

tonnes

37,133

42,807

31,574

Finished cobalt

tonnes

852

884

478

 *  Refer to Non-IFRS measures in Katanga's Q1 2015 Management's Discussion and Analysis.

Financial

  • Profitability during Q1 2015, when compared to Q4 2014 and Q1 2014, was adversely affected by:
    • The decline in the copper and cobalt market price, resulting in a sales price variance of $29.1 million when compared to Q4 2014 and $38.9 million when compared to Q1 2014;
    • A $24.9 million write-down of inventory to net realizable value driven by the copper price decline;
    • Costs being higher due to increased mining expenditure, increased processing costs at KTC and Luilu which incurred higher consumption rates and prices for reagents, and increased depreciation as a result of the enlarged asset base; and
    • 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 $24.4 million for the quarter.
  • Income tax recoveries were $57.4 million in Q1 2015 (Q4 2014 - $15.3 million; Q1 2014 - $55.9 million) due to deferred tax recognized on tax losses carried forward in the DRC.
  • Cash flows from operating activities decreased in Q1 2015 due to the decline in profitability, in addition to increased working capital requirements, notably prepayments for mining fleet, capital expenditure and royalties. These cash outflows were funded by customer prepayments from Glencore.

Mining

  • During Q1 2015 the Company increased the ore production by 39%, when compared to Q1 2014, this is principally due to an increase of 58% at KOV Open Pit where 4 new Caterpillar 793D haul trucks were commissioned in Q2 2014. KTO contributed with a 13% increase in ore production, compared to Q1 2014 due to higher stope availability resulting from increased backfilling and development. Waste tonnes mined were 4% higher than Q1 2014.
  • Q1 2015 ore tonnes mined were comparable to Q4 2014, despite dewatering issues encountered at KOV during the DRC rainy season. This effect also resulted in the lower average copper grade achieved as higher grade material at the pit bottom was not as accessible. The Q1 2015 contained copper increased by 23% compared to Q1 2014 and reduced by 16% compared to Q4 2014.
  • In Q1 2015, the Company commissioned:
    • Two new Caterpillar R2900G loaders to increase the underground mining volumes;
    • One new lube truck for use underground; and
    • Two Caterpillar D11 dozers and one Caterpillar 834K dozer to optimize mined waste management.

Processing

  • Ore milled at KTC during Q1 2015 reached a record level driven by the increased volumes milled at CM5 (commissioned in Q4 2014 as part of the Phase 5 Expansion Project). CM5 is currently milling at 90% of design capacity.
  • Finished copper metal produced at Luilu increased by 18% over Q1 2014 driven by the increased throughput volumes partly offset by the lower mined grades. Finished copper metal produced was a 13% decrease over Q4 2014 driven by the lower mined grades specifically at KOV where mining was affected by inclement weather leading to variable grade feed at KTC.
  • Cobalt metal produced totalled 852 tonnes for Q1 2015, a 78% increase from Q1 2014 due to the increased volume fed together with improved recoveries thereon.
  • In Q1 2015, the Company commissioned the following at Luilu in order to improve throughputs and recoveries:
    • An upgrade to the existing water filtration plant;
    • A new oxide receiving thickener; and
    • Enhancements to the roaster for utilities, calcine cooling and gas treatment.

Outlook

  • The Board of Directors has approved capital expenditure of $437.0 million for the upgrading of the Company's production process to enable whole ore leaching. The Company expects this new process, which is anticipated to be commissioned in 2017, will improve its recoveries on copper oxide and consequently reduce unit costs, as well as increase the life of mine. Due to related reductions in other planned capital expenditures, the net effect on medium term capital expenditures is expected to be $104 million. Glencore has indicated it will provide or procure the additional funding required, if any, for the whole ore leach project in addition to any funding necessary for operations and other capital expenditure during the whole ore leach project build and commissioning phases.
  • During Q2 2015, the Company expects to commission:
    • Five new Caterpillar 793D haul trucks operating in KOV to increase ore and waste mining capacity; and
    • Improvements to the froth skimmers in the KTC oxide flotation section.
  • The Company will address the reintroduction of regular analyst calls.

Election of Directors

Katanga is pleased to announce that the nominees listed in the management proxy circular for the 2015 Annual Meeting of Shareholders were elected as directors of Katanga. Detailed results of the vote for the election of directors held at the Annual Meeting of Shareholders on May 13, 2015 in Toronto are set out below.           

Nominee


Votes For

% For

Votes Withheld

% Withheld

Hugh Stoyell


1,517,699,556

99.99%

174,650

0.01%

Johnny Blizzard


1,517,582,840

99.98%

291,336

0.02%

Liam Gallagher


1,448,632,437

95.44%

69,241,769

4.56%

Aristotelis Mistakidis


1,517,348,640

99.97%

525,566

0.03%

Tim Henderson


1,517,550,340

99.98%

323,866

0.02%

Terry Robinson


1,517,697,856

99.99%

176,350

0.01%

Robert Wardell


1,517,667,556

99.99%

206,650

0.01%

Mr. Tim Henderson has joined Katanga as non-executive Director. Mr. Henderson is currently employed with Glencore International AG and also serves as Director of Mutanda Mining Sprl. He holds a HND degree in Mining Engineering and a MSc in Mineral Processing from the Camborne School of Mines, UK, and is a Chartered Engineer. Mr. Henderson was appointed for a term expiring at the next annual general meeting of shareholders of the Company in 2016.

This press release was prepared under the supervision of Tim Henderson, Technical Consultant and Director, Katanga and a "qualified person" as such term is defined in NI 43-101. Mr. Henderson has reviewed and approved the contents of this press release.

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 commissioning of new haul trucks and improvements to froth skimmers at KTC,  the anticipated decrease in power disruption relating to the upgrade in power infrastructure, the matters relating to the Power Project, the completion of the upgrade in power infrastructure, 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 and the 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: 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 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 Democratic Republic of Congo ("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 operations, the completion of the T17 Underground Mine and the Power Project; the successful completion of, and realizing the intended benefits from the Power Project; new equipment performs to expectations; 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; 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



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