ZUG, Switzerland,
Feb. 8, 2017 /CNW/
- Katanga Mining Limited (TSX: KAT) ("Katanga"
or the "Company") today announces its financial results for the
fourth quarter and 2016 fiscal year. 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, 2016
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Three months ended
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Twelve months ended
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Dec 31,
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Sep 30,
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Dec 31,
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Dec 31,
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2016
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2016
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2015
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2016
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2015
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Financial
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Realized copper price*
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$/lb
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-
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-
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(4.35)
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-
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2.33
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Realized cobalt price
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$/lb
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-
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-
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5.13
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-
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10.74
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Total sales*
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$'000
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3
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(1,632)
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(1,497)
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(30,127)
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669,701
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- including repricing*
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$'000
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3
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(1,632)
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(7,863)
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(30,853)
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(65,359)
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EBITDA**
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$'000
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(64,468)
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(55,214)
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(78,138)
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(249,141)
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(285,697)
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Net loss attributable to
shareholders
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$'000
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(113,219)
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(99,499)
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(123,371)
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(427,683)
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(424,064)
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Cash flows from operating
activities
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$'000
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(7,090)
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(33,141)
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(140,523)
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(161,080)
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(600,084)
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* Negative price and sales amounts are a
result of quality discounts, adverse repricing and mark to market
("M2M")
adjustments
** Refer
to Item 22 in the MD&A; Non-IFRS Measures. Due to the
suspension of production C1 cash costs are not calculated for this
period.
Review of 2016 Fourth Quarter Results
- Profitability during Q4 2016, when compared to Q3 2016
and Q4 2015, was affected by:
- Write-off of consumable stores inventory with a net
impact to the income statement of $9.9
million in Q4 2016 (Q3 2016 - $0.09
million; Q4 2015 – nil);
- The release of the restructuring provision relating to
contractor demobilisations and employee redundancy costs due to the
suspension of production resulted in an income of $3.7 million in Q4 2016, compared to an expense
of $12.3 million in Q4 2015 (Q3 2016
– nil); and
- Income tax expense of $3.7
million in Q4 2016 relating to changes in the deferred tax
liability (Q3 2016 - $5.5 million
expense; Q4 2015 - $0.1 million
recovery). Deferred tax recognition on tax losses carried forward
in the DRC ceased in Q2 2015. Such recognition will be reassessed
on commissioning of the WOL Project.
- Cash outflows from operating activities decreased in Q4
2016, when compared to Q4 2015 and Q3 2016, due to lower working
capital requirements, notably for the reduction in inventories and
prepayments following the suspension of copper and cobalt
processing. These cash outflows were funded by
Glencore.
Review of 2016 Full Year Results
- Profitability during 2016, when compared to 2015, was
affected by:
- Quality discounts of $27.0
million on finalization of outstanding 2015
sales;
- Reduced operating expenditures due to the suspension of
copper and cobalt processing;
- The release of the restructuring provision of
$0.6 million relating to contractor
demobilisations and employee redundancy costs following the
suspension of production, which totalled to a $36.3 million expense in 2015;
- The cessation of borrowing cost capitalization during Q1
2015 due to the completion of the Phase 5 Expansion Project,
resulting in Amended Loan Facility interest expense of $305.5 million for 2016 (2015 - $239.8 million) and customer prepayment interest
of $43.5 million for 2016 (2015 –
$19.7 million); and
- Income tax expense of $9.0
million in 2016 relating to 2014 and 2015 corporate income
taxes as well as changes in the deferred tax liability (2015 -
$111.3 million recovery). Deferred
tax recognition on tax losses carried forward in the DRC ceased in
Q2 2015. Such recognition will be reassessed on commissioning of
the WOL Project.
- Cash outflows from operating activities decreased in
2016, when compared to 2015, due to lower working capital
requirements, notably for the reduction in inventories and
prepayments following the suspension of copper and cobalt
processing, partially offset by a higher reduction of payables
during 2016. These cash outflows were funded by
Glencore.
Unless otherwise specified, all $ amounts referred to in
this press release are U.S. dollars.
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. 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 (as defined in the Company's Annual Information Form
for the year ended December 31, 2015
dated March 30, 2016); new equipment
performs to expectations;; 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, operating expenses 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 unforeseen delays or changes to the WOL Project;
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