Katanga Mining Provides Update on Major Projects, Announces 2019 Third Quarter Production Results

Date : 10/24/2019 @ 11:40PM
Source : PR Newswire (Canada)
Stock : Katanga Mining Ltd (KAT)
Quote : 0.13  0.0 (0.00%) @ 12:06PM

Katanga Mining Provides Update on Major Projects, Announces 2019 Third Quarter Production Results

Katanga Mining (TSX:KAT)
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ZUG, SWITZERLAND, Oct. 24, 2019 /CNW/ - Katanga Mining Limited (TSX: KAT) ("Katanga" or the "Company") today provides an update on its major projects and announces its 2019 third quarter production results at the Company's 75%-owned subsidiary Kamoto Copper Company ("KCC").

Katanga Mining Limited (CNW Group/Katanga Mining Limited)

Update on Major Projects

Cobalt Projects Update
The cobalt debottlenecking projects (the "Cobalt Projects") at KCC are expected to continue throughout 2020. Commissioning of two filter presses was completed earlier in the year, while the third filter press was commissioned during Q3 2019. Commissioning of the magnesium oxide ("MgO") plant was completed earlier in the year while commissioning of the cobalt dryers concluded with additional works required due to mechanical failure during Q3 2019. 

Cobalt dryer #1 is undergoing a temporary repair which should be completed in Q4 2019. Dryer #2 is undergoing design modifications and is expected to be commissioned during Q1 2020. Once the permanent upgrade is completed on dryer #2, dryer #1 will be taken off-line to commence the upgrade.  Ramp up to full drying capacity is  targeted for mid-2020. Once full drying capacity is reached, KCC will be in a position to export the dry cobalt production, including from processing accumulated cobalt inventories.

The objective of the Cobalt Projects is to upgrade the existing cobalt plant design in order to reduce bottlenecks through modification of the precipitation, thickening, filtration, drying and bagging processes. This will align the design of the cobalt plant with the average life-of-mine cobalt production plan of 30,000 tonnes per annum. These improvements integrate with the existing WOL processing facilities at Luilu.

Acid Plant Update

The Sulphuric Acid production (Phase 1), Sulphur Dioxide production (Phase 2) and Steam Turbine Generator (Phase 3) project at KCC (the "Acid Plant"), continues to progress. All civil works have been completed for Phase 1 (Sulphuric Acid Production Plant) with Phases 2 and 3 civil works scheduled for completion in Q4 2019. Structural, mechanical, plate work, piping and electrical and instrumentation installation are progressing. Design has been completed, and some procurement items will continue into Q4 2019, but mainly relating to the Sulphur dioxide production (Phase 2) and the Steam Turbine Generator (Phase 3).

KCC has received from the Directorate for the Protection of the Mining Environment ("DPEM"), the applicable Environmental Impact Study approvals. Commissioning of the Acid Plant is scheduled to continue through H1 2020.

Production highlights during the nine months ended September 30, 2019 and Cobalt Update

Copper and Cobalt Production

Copper cathode production increased to 59,424 tonnes in Q3 2019 from 52,514 tonnes in Q2 2019.

Cobalt contained in hydroxide production increased to 4,763 tonnes in Q3 2019 from 2,607 tonnes in Q2 2019.  Of the total cobalt production in Q3 2019, 97% complied with Applicable Regulations (see below).

As previously announced in Q4 2018, KCC temporarily suspended the export and sale of cobalt due to the presence of uranium detected in the cobalt hydroxide at levels that exceeded the acceptable limit allowed for export of the product through main African ports. The low levels of radioactivity detected in the uranium to date do not present a health and safety risk.

On April 25, 2019, KCC resumed the export and sale of a limited quantity of cobalt that complies with both international and local Democratic Republic of Congo ("DRC") transport regulations with respect to the levels of uranium contained in the cobalt hydroxide (the "Applicable Regulations"). An aggregate of 97% of the cobalt hydroxide produced in Q3 2019 (97% in Q2 2019) complied with international transport regulations and was also below the acceptable limit of contained uranium allowed for export through main African ports.

KCC, together with the Company and KCC's 25% shareholder, DRC state-owned La Générale des Carrières et des Mines ("Gécamines"), has been working with the DRC government's Ministry of Mines and the Congolese Atomic Energy Agency on a long-term technical solution in the form of an ion exchange plant (the "IX Plant"). KCC has also implemented various alternative interim solutions, both operational and regulatory, resulting in the recommencement of the export and sale of a limited quantity of cobalt. The IX Plant has been approved by the boards of the Company and KCC respectively and remains as a potential long term option.

Following the authorization procedures of the IX Plant required by the 2018 Mining Code, the Ministry of Mines has requested KCC to submit a complete bankable feasibility study ("BFS") for the entire KCC project rather than a feasibility study limited to the IX Plant. Given the effectiveness of the interim solutions using phosphoric acid over the past two quarters, KCC undertook to provide a BFS for the entire KCC project by 2019 year-end, which will cover the long term IX Plant option.

Mining



Three months ended

Nine months ended



Sep 30,

Jun 30,

Sep 30,

Sep 30,

Sep 30,



2019

2019

2018

2019

2018

Ore mined*/**














KOV open pit

tonnes

1,728,062

981,529

2,343,785

3,791,728

5,013,930

Mashamba East open pit

tonnes

1,674,866

1,334,862

953,909

4,096,323

2,466,508

Total open pits

tonnes

3,402,928

2,316,391

3,297,694

7,888,051

7,480,438








KTO underground

tonnes

158,116

142,131

141,973

439,552

215,658

Total ore mined

tonnes

3,561,044

2,458,522

3,439,667

8,327,603

7,696,096








Waste mined and primary development*














KOV open pit

tonnes

9,604,164

8,891,254

8,369,083

25,778,144

21,700,119

Mashamba East open pit

tonnes

5,161,024

4,769,012

6,996,303

12,907,288

15,446,130

Total open pits

tonnes

14,765,188

13,660,266

15,365,386

38,685,432

37,146,249








KTO underground

primary development

meters

-

-

126

137

976

Total waste mined***

tonnes

14,765,188

13,660,226

15,365,386

38,685,432

37,146,249








Total material mined














KOV open pit

tonnes

11,332,226

9,872,783

10,712,868

29,569,872

26,714,049

Mashamba East open pit

tonnes

6,835,890

6,103,874

7,950,212

17,003,611

17,912,638

Total open pits

tonnes

18,168,116

15,976,657

18,663,080

46,573,483

44,626,687








KTO underground

tonnes

158,116

142,131

141,973

439,552

215,658

Total material mined***

tonnes

18,326,232

16,118,788

18,805,053

47,013,035

44,842,345








Total contained copper

tonnes

112,015

68,731

69,643

248,363

156,754


 


Ore summary














Total primary ore mined

tonnes

2,978,497

1,900,443

1,655,605

6,462,769

3,674,390

Average Cu grade

%

3.59

3.38

3.48

3.60

3.58

Average Co grade

%

0.50

0.33

0.51

0.42

0.48








Total very low-grade ore mined

tonnes

471,759

339,812

789,380

1,359,751

1,683,266

Average Cu grade

%

0.95

0.98

0.97

0.96

1.00

Average Co grade

%

0.25

0.24

0.21

0.23

0.21








Total cobalt ore mined

tonnes

110,789

218,266

994,682

505,083

2,338,440

Average Co grade

%

0.67

0.78

0.57

0.74

0.59

Average Cu grade

%

0.61

0.53

0.44

0.56

0.36

Total ore mined

tonnes

3,561,045

2,458,521

3,439,667

8,327,603

7,696,096








Average Cu grade

%

3.15

2.80

2.02

2.98

2.04

Average Co grade

%

0.47

0.36

0.46

0.41

0.45



*   

These segments include classification of ore volumes into different categories, being primary copper containing ore, low-grade copper containing ore (but still above cut-off grade) and cobalt containing ore (that contains copper under the copper cut-off grade but cobalt over the cobalt cut-off grade). The primary ore component is defined as having a Cu grade of greater than 1.25%, the low-grade component is defined as having a Cu grade between 0.65% and 1.25% and the cobalt ore component is defined as having a Cu grade of less than 0.65% and Co grade greater than 0.30%.

**  

Excludes any ore hydro-mined out of Kamoto Interim Tailings Dam ("KITD") as this is not a traditional mining operation, but instead, a hydro-mining reclamation project.

*** 

Underground waste is excluded.

 

Total ore mined increased to 3,561,045 tonnes in Q3 2019 from 2,458,521 tonnes in Q2 2019. Total ore mined increased to 8,327,603 tonnes in Q3 2019 YTD from 7,696,096 tonnes in Q3 2018 YTD. 

Total waste mined increased to 14,765,188 tonnes in Q3 2019 from 13,660,266 tonnes in Q2 2019. Total waste mined increased to 38,685,432 tonnes in Q3 2019 YTD from 37,146,249 tonnes in Q3 2018 YTD.           

Total contained copper increased to 112,015 tonnes in Q3 2019 from 68,731 tonnes in Q2 2019. Total contained copper increased to 248,363 tonnes in Q3 2019 YTD from 156,754 tonnes in Q3 2018 YTD.        

The increase in total material mined in the combined open pits in Q3 2019 compared to Q3 2018 related to the ramp-up of production and commissioning of the second Whole Ore Leach train in H2 2018. 

The increase in total material mined in the open pits in Q3 2019 compared to Q2 2019 reflects the increase of stockpiles ahead of the wet season and subsequent ramp-up of production in line with the optimized mine plan and EW refurbishment plan. 

The ongoing mining and stockpiling of low-grade ore and cobalt ore reflects the optimization of the long-term feed strategy. As a result of this strategy, low-grade ore and cobalt ore are currently being stockpiled and will be fed into the processing plant on a planned basis in the future.

Kamoto Concentrator



Three months ended

Nine months ended



Sep 30,

2019

Jun 30,

2019

Sep 30,

2018

Sep 30,

2019

Sep 30,

2018

Total material milled and processed

tonnes

2,467,572

2,574,400

1,944,616

7,749,087

5,046,933








KITD material processed

tonnes

561,506

773,672

620,909

2,082,505

1,756,963

Cu grade in ore

%

1.22

1.32

1.63

1.36

1.58

Co grade in ore

%

0.17

0.16

0.18

0.17

0.17








Open pit ore milled

tonnes

1,768,335

1,642,357

1,178,617

5,229,092

3,102,110

Cu grade in ore

%

3.50

3.14

3.26

3.35

3.56

Co grade in ore

%

0.43

0.28

0.47

0.37

0.47








Underground ore milled

tonnes

137,731

158,371

145,090

437,490

187,860

Cu grade in ore

%

3.40

3.64

3.28

3.56

3.28

Co grade in ore

%

0.65

0.55

0.65

0.57

0.62








Production














Oxide concentrate

tonnes

26,376

38,663

21,621

102,575

71,342

Sulphide concentrate

tonnes

26,349

28,165

27,501

84,264

68,463

Total concentrate produced

tonnes

52,725

66,828

49,122

186,839

139,805

Cu grade in concentrate

%

20.45

18.84

24.37

19.44

19.91

Co grade in concentrate

%

2.47

2.14

2.96

2.23

1.82








Oxide feed received at Luilu

tonnes

1,748,911

1,599,507

1,195,149

5,171,237

3,064,107

Cu grade in oxide feed

%

3.16

2.93

2.99

3.08

3.11








Total contained copper

tonnes

66,057

59,485

47,660

195,359

123,039

 

Total material milled and processed decreased to 2,467,572 tonnes in Q3 2019 from 2,574,400 tonnes in Q2 2019. Total material milled and processed increased to 7,749,087 tonnes in Q3 2019 YTD from 5,046,933 tonnes in Q3 2018 YTD.    

Total concentrate produced decreased to 52,725 tonnes in Q3 2019 from 66,828 tonnes in Q2 2019. Total concentrate produced increased to 186,839 tonnes in Q3 2019 YTD from 139,805 tonnes in Q3 2018 YTD.

Total oxide feed received at Luilu increased to 1,748,911 tonnes in Q3 2019 from 1,599,507 tonnes in Q2 2019. Total oxide feed received at Luilu increased to 5,171,237 tonnes in Q3 2019 YTD from 3,064,107 tonnes in Q3 2018 YTD.

Total contained copper in concentrate and oxide feed produced increased to 66,057 tonnes in Q3 2019 from 59,485 tonnes in Q2 2019. Total contained copper in concentrate and oxide feed produced increased to 195,359 tonnes in Q3 2019 YTD from 123,039 tonnes in Q3 2018 YTD.      

The increase in total material milled and processed in Q3 2019 compared to Q3 2018 is driven by the increase in milling capacity due to the ramp-up and optimization of CM6 and CM7, following commissioning at the end of 2018, as well as increased availability from the CM5 oxide mill.

The decrease in total material milled and processed in Q3 2019 compared to Q2 2019 is driven by the refurbishment of the EW plant.

Luilu metallurgical plant



Three months ended

Nine months ended



Sep 30,

2019

Jun 30,

2019

Sep 30,

2018

Sep 30,

2019

Sep 30,

2018

WOL feed – oxide concentrate*

tonnes

26,376

38,663

22,096

102,575

162,565

WOL feed – oxide feed

tonnes

1,748,911

1,599,507

1,195,149

5,171,237

3,064,107

Total oxide feed

tonnes

1,775,287

1,638,170

1,217,245

5,273,812

3,226,672








Total oxide Cu grade

%

3.28

3.14

3.2

3.24

3.62

Total oxide Co grade

%

0.43

0.27

0.44

0.36

0.46








Sulphide roaster feed

tonnes

25,089

27,589

26,688

79,451

32,511








Sulphide Cu grade

%

26.05

26.13

29.98

26.38

30.66

Sulphide Co grade

%

3.67

3.28

4.22

3.33

4.18








Production














Copper cathode

tonnes

59,424

52,514

39,296

169,114

102,587

Cobalt contained in hydroxide

tonnes

4,763

2,607

3,512

10,881

6,466

consists of amounts produced at KTC during comparable periods plus inventory drawdown

Total copper cathode produced increased to 59,424 tonnes in Q3 2019 from 52,514 tonnes in Q2 2019. Total copper cathode produced increased to 169,114 tonnes in Q3 2019 YTD from 102,587 tonnes in Q3 2018 YTD.

Total cobalt contained in hydroxide increased to 4,763 tonnes in Q3 2019 from 2,607 tonnes in Q2 2019. Total cobalt contained in hydroxide increased to 10,881 tonnes in Q3 2019 YTD from 6,466 tonnes in Q3 2018 YTD.

The increase in Q3 2019 copper cathode and cobalt contained in hydroxide production compared to Q3 2018 was driven by a ramp-up of oxide material treatment rates at the Luilu refinery. 

The increase in copper cathode production in Q3 2019 from Q2 2019 was due to progress made on the EW refurbishment program and current efficiency improvements.

Outlook

On April 29, 2019 the Company announced that KCC had commenced a comprehensive business review targeting mining efficiencies and processing improvements as well as enhancements to product quality realizations and overhead cost reductions (the "Review").

Initial indications suggest there may be scope for margin improvements in the order of $200-250 million per annum. Further work, seeking to develop detailed implementation plans to deliver these improvements, is being undertaken, which if successful, are expected to be realizable by 2022.

To effect these improvements, KCC has created a transformation office to facilitate a 36 months turnaround plan, designed to unlock the potential of the people and assets across the site. To ensure timely project delivery, KCC has defined business priorities such as, but not limited to, improved efficiencies, maintenance, labor productivity and production quality, while decreasing the costs associated with procurement, sourcing and information technology.

These improvements are expected to materially increase the cash flow generation of KCC from 2022, when it is projected to achieve targeted life of mine average production of approximately 300kt of copper and 30kt of cobalt, resulting in a steady state copper unit cash cost of $1.65/lb, before cobalt by-product credits, and $0.75/lb after cobalt by-products revenue, net of allocable cobalt direct production and realization/selling costs of c$0.60/lb.1

Production guidance for copper and cobalt has been moderately revised, compared to the August 2019 release, as follows:

Commodity


Units

Production Guidance




FY 2019

FY 2020

FY 2021

Copper(1)


Kt

233

270

295

Cobalt(2)


Kt

16

29

32

Notes:

(1)

Annual copper production guidance subject to +/- 15 kt variation

(2)

Annual cobalt production guidance subject to +/- 2 kt variation.

   

Notwithstanding these targets, production in any given year will fluctuate as a function of numerous factors, including availability and utilization of the plant, geological and mining conditions, logistics, availability of reagents, availability of electricity, macro-economic factors such as commodity prices, input costs and geopolitical developments (including the 2018 Mining Code)

Qualified Person

Tahir Usmani, PEng, APEGA, Chief Mine Planning Engineer of KCC, has reviewed and approved the scientific and technical disclosure in this news release. Mr. Usmani is a "qualified person" for the purposes of NI 43-101 - Standards of Disclosure for Mineral Projects.

________________

1

Realization costs are based on an assumed copper price of $6,500/t and realized cobalt price of $15/lb.

 

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. 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. The key assumptions that have been made in connection with the forward-looking statements include the following: that the Company will complete the ramp up of full drying capacity as part of the Cobalt Projects in the time expected and realize the anticipated benefits of the Cobalt Projects; there being no significant disruptions affecting the operations of the Company whether due to legal disputes, judicial action, labour disruptions, supply disruptions, power disruptions, rollout of new equipment, damage to equipment or otherwise; permitting, development, operations, expansion and acquisitions at KCC being consistent with the Company's current expectations; the Company being able to confirm the margin and cash flow improvements identified by the Review and then successfully implementing any such improvements; continued recognition of the Company's mining concessions and other assets, rights, titles and interests in the DRC; the completion of the ion exchange plant in the time contemplated, at the expected cost of construction; the completion of the Acid Plant in the time contemplated, at the expected cost of construction; 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; new equipment performing consistent with 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. 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

Copyright 2019 Canada NewsWire

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