ZUG, Switzerland, April 2, 2018 /CNW/ - Katanga Mining
Limited (TSX: KAT) ("Katanga" or the
"Company") today announces its financial results for the
fourth quarter and 2017 fiscal year. Katanga's Financial Statements
and Management's Discussion and Analysis will be filed on SEDAR,
www.sedar.com.
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Three months
ended
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Years
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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Dec 31,
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2017
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2017
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2016
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2017
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2016
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Financial
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Total
sales*
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$'000
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7,696
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5,875
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3
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25,292
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(30,127)
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- including
repricing*
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$'000
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265
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(169)
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3
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99
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(30,853)
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Cost of
sales
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$'000
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(4,289)
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(3,031)
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-
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(31,839)
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-
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Gross profit
(loss)
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$'000
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3,407
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2,844
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3
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(6,547)
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(30,127)
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Net loss attributable
to
shareholders
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$'000
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(230,657)
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(115,362)
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(113,219)
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(573,496)
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(419,887)
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Cash flows used in
operating
activities
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$'000
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(71,844)
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(56,745)
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(7,089)
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(172,487)
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(161,080)
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EBITDA**
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$'000
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(187,587)
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(69,091)
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(64,468)
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(382,748)
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(238,745)
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Mining
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Waste
mined
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tonnes
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11,193,159
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14,358,022
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2,152,986
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45,294,775
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8,174,964
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Ore mined
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tonnes
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433,169
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-
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-
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433,169
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825
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Average copper
grade
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%
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2.18
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-
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-
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2.18
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2.67
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Contained copper in
ore mined
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tonnes
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9,459
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-
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-
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9,459
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22
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KTC
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KITD material
milled
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dmt
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481,617
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586,664
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-
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1,758,890
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-
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KITD copper contained
in
concentrate
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dmt
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5,061
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4,972
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-
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14,912
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-
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KOV Open pit ore
milled
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tonnes
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163,211
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-
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-
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163,211
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-
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KOV Open pit ore
grade
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%
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4.05
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-
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-
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4.05
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-
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Luilu
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WOL feed - KITD
concentrate
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dmt
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13,755
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-
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-
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13,755
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-
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WOL feed - open pit
ore
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dmt
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126,471
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-
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-
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126,471
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-
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Finished
copper
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tonnes
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2,196
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-
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-
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2,196
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-
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Finished
cobalt
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tonnes
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-
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-
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-
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-
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-
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*
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Negative price and
sales amounts are a result of quality discounts, adverse repricing
and marked-to-
market ("M2M") adjustments
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**
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Refer to item 23
Non-IFRS financial measures. Due to the suspension of production C1
cash costs
are not calculated for this period.
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Commissioning and resumption of production
- On September 11, 2015 the Company
announced the decision to suspend the processing of copper and
cobalt during the construction phases of the whole ore leach
project ("WOL Project"). The suspension continued through 2017 with
copper production resuming on December 11,
2017;
- Commissioning of phase 1 of the WOL Project was completed in
November 2017 and the first copper
cathode was produced on December 11,
2017;
- Phase 2 construction activities of the WOL Project have
continued and are progressing according to the 2018 project
execution plan. Full commissioning of the WOL Project is expected
in Q4 2018; and
- Mining operations continued during 2017 at the KOV open pit
mine ("KOV Open Pit") and Mashamba East open pit mine, still
focusing on waste stripping.
Review of 2017 Fourth Quarter Results
Financial
Profitability during Q4 2017, when compared to Q3 2017 and Q4
2016, was affected by:
- Sales of 451 tonnes of finished copper cathode which represents
a $3.3 million increase over Q3 2017
during which period there were no finished copper cathode
sales;
- During Q4 2017, the Company sold 1,915 tonnes of copper
contained in the Kamoto interim tailings dam ("KITD") oxide
concentrate to Mutanda Mining SARL ("Mutanda"), which resulted in
revenues of $4.5 million (Q3 2017 -
$5.9 million); The production of KITD
concentrates used for the ramp-up of operations in Q4 2017 will
continue and the Company does not expect to make any further sales
of concentrate in 2018;
- Cost of sales relating to the sale of copper cathode and copper
concentrate was driven by metal stock movement amounting to
$4.3 million in Q4 2017 (Q3 2017 -
$3.0 million; Q4 2016 – $nil);
- EBITDA for Q4 2017 was a loss of $187.6
million compared to a loss of $64.5
million for Q4 2016. Increased losses arose due to an
increase in mine infrastructure, ramp-up and support care and
maintenance costs, including higher diesel, mechanical spares and
personnel costs; and
- Net loss attributable to shareholders for Q4 2017 was
$230.7 million compared to a loss of
$113.2 million for Q4 2016. In
addition to the items noted in EBITDA, the increased net loss in Q4
2017 resulted from higher depreciation, and interest.
- Cash flow used in operating activities was $71.8 million in Q4 2017, and $7.1 million in Q4 2016.
Mining
- Waste mined in Q4 2017 was 11,193,159 tonnes, which was
9,040,173 tonnes (419.9%) higher than Q4 2016. The increase was due
to greater waste mining activities in 2017, carried out in
preparation for the commissioning of the WOL Project, phase 1 of
the core circuit which was completed in November 2017;
- Following the commissioning of phase 1 of the WOL Project, the
resumption of copper production and ore mining commenced in Q4
2017. Ore mined at the KOV Open Pit Mine ("KOV Open Pit") during Q4
2017 was 433,169 tonnes with an average copper grade of 2.18%,
resulting in contained copper of 9,459 tonnes. In 2016, ore mined
was 825 tonnes at KOV Open Pit and was related to incidental ore
mined during waste mining; and
- In Q4 2017, the Company did not commission any new items of
fleet.
Processing
- KITD material milled for Q4 2017 at the Kamoto Concentrator
("KTC") was 481,617 tonnes, resulting in 5,061 tonnes of contained
copper (oxides and sulphides). Copper contained in KITD oxide
concentrate of 1,915 tonnes was sold to Mutanda in Q4 2017;
- The total tonnes milled at KTC were 644,828 for Q4 2017, split
between 481,617 tonnes of KITD material and 163,211 tonnes of KOV
open pit ore;
- Of the 163,211 tonnes of KOV open pit ore milled, 36,740 tonnes
were used to commission the milling circuit and flotation circuit
at KTC.;
- Material processed by Luilu Metallurgical Plant ("Luilu") after
commissioning was 140,226 tonnes, of which 126,471 was KOV open pit
ore tonnes and 13,755 was KITD oxide concentrate tonnes, which
resulted in production of finished copper of 2,196 tonnes;
- In Q4 2017, the Company re-commissioned the following assets at
KTC:
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- B3 crusher for crushing capacity;
- CM1, CM4, BM1 and BM3 for milling capacity; and
- Flotation banks 801, 821, 802 and 803 for flotation
capacity.
- In Q4 2017, the Company commissioned:
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- A new pump station for the hydro-mining activities at KITD, to
facilitate a production increase from 300tph to 500tph;
- The core copper circuit of phase 1 WOL plant at Luilu;
- A new metallurgical accounting system; and
- Two new pipelines from KTC and Luilu for the deposit of
tailings into the Mupine tailings storage facility.
- During Q4 2017, the Company completed the following work on the
WOL Project:
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- Construction of the receiving thickener, core copper circuit
counter current decantations, leach plant, high grade clarifier for
the first phase of WOL Project and PLS and raffinate ponds for the
first and second phase of WOL Project. The required modifications
to the existing solvent extraction and electro- winning plants for
first copper production in Q4 were also completed. Key services
such as gland seal water, flocculant and lime plants were also
installed and commissioned;
- The fibre communication network, SCADA (Supervisory Control and
Data Acquisition software used for automated control of the plant),
electrical and instrumentation equipment were installed and
commissioned, allowing for plant start-up in November 2017;
- Related capital expenditures amounted to $53.1 million in Q4 2017;
- Concurrent with the construction of the WOL project plant and
infrastructure, the current Life of Mine plan continues to be
optimized to ensure the appropriate blend will be supplied to the
WOL process in order to maximize copper and cobalt recovery and to
minimize operating costs per unit; and
- Design work progressed during Q4 2017 on the acid plant (the
"Acid Plant"), cobalt de-bottlenecking and cobalt dryer projects.
The Acid Plant is a sulfuric acid and sulfur dioxide production
plant expected to be constructed at the mine site owned by the
Company's 75% subsidiary Kamoto Copper Company ("KCC"), which will
improve the reliability of the supply of these reagents to the WOL
Project processing circuit. The Acid Plant is designed to produce
1,900 tpd of sulfuric acid, 200 tpd of sulfur dioxide and 17MW of
co-generated power. This will reduce KCC's reliance on imported
volumes of reagents brought to the mine through various
international borders.
Review of 2017 Full Year Results
Financial
Profitability during 2017, when compared to 2016, was affected
by the following:
- Sales of 451 tonnes of finished copper cathode which
represented a $3.3 million increase
over 2016 during which no copper cathode was produced. However, the
Company has sales of negative $30.1
million in 2016 due to quality discounts;
- Sales of 2,746 tonnes of copper contained in KITD oxide
concentrate and 5,862 tonnes from site clean up amounting to
$22.3 million sold to Mutanda (2016 -
$nil);
- Cost of sales relating to the sale of copper cathode and copper
concentrate is driven by metal stock movement amounting to
$31.8 million in 2017 (2016 – $nil).
The business rationale for selling the concentrate was to reduce
working capital by liquidating inventory on hand that would
otherwise not be processed in the short term to produce more
profitable copper cathode. This led to gross loss on copper
concentrate sold. The production of KITD concentrates used for the
ramp-up of operations in Q4 2017 will continue and the Company does
not expect to make any further sales of concentrate in 2018;
- EBITDA for the year ended December 31,
2017 was a loss of $382.7
million compared to a loss of $238.7
million for the year ended December
31, 2016. This was due to the increased costs associated
with mining and general ramp-up, ahead of WOL Project
commissioning; and
- Net loss attributable to shareholders for the year ended
December 31, 2017 was $573.5 million compared to a loss of $419.9 million for the year ended December 31, 2016. In addition to the items noted
in EBITDA, the increased net loss in the year ended 2017 was as a
result of higher depreciation and interest expense.
Mining
- Waste mined in 2017 was 45,294,775 tonnes, or 454.1% higher
than 2016 driven by operational requirement to secure sufficient
ore availability for the commissioning of the WOL Project, for
which the core circuit of phase 1 was completed in Q4 2017;
and
- Following the commissioning of the core circuit of phase 1 of
the WOL Project and resumption of copper production, ore mining
commenced in Q4 2017. Ore mined at the KOV Open Pit Mine ("KOV Open
Pit") during 2017 was 433,169 tonnes. The average copper grade of
ore mined from KOV Open Pit was 2.18%, resulting in contained
copper of 9,459 tonnes. In 2016, ore mined was 825 tonnes at KOV
and is related to incidental ore mined during waste mining.
Processing
- The total tonnes of KITD material milled in 2017 was 1,758,890
tonnes with 14,912 tonnes of contained copper produced (in oxide
& sulphide concentrates). Copper contained in KITD oxide
concentrate of 2,746 tonnes and copper derived from site clean-up
of 5,862 tonnes was sold to Mutanda in 2017;
- During 2017, work completed on the WOL Project included:
-
- Construction of the acid storage tanks has been completed and
progress continues on 'Structural, Mechanical, Platework and Piping
("SMPP") activities on the Receiving, Preleach, Leach and CCD
trains. The SCADA (Supervisory Control and Data Acquisition
software used for automated control of the plant), electrical and
instrumentation equipment were installed and commissioned, allowing
for plant start-up in November 2017;
and
- Related capital expenditures amounted to $189.6 million in 2017, which principally related
to the installation of the SMPP, electrical, control and
instrumentation equipment.
- The total tonnes milled at KTC was 1,922,101 for 2017, split
between 1,758,890 tonnes of KITD material and 163,211 tonnes of
open pit ore;
- Of the 163,211 tonnes of open pit ore milled, 36,740 tonnes
were used to commission the milling circuit and flotation circuit
at KTC;
- Material processed by Luilu after commissioning was 140,226
tonnes, of which 126,471 tonnes was open pit ore and 13,755 tonnes
was KITD oxide concentrate tonnes, which resulted in finished
copper of 2,196 tonnes;
- In Q4 2017, the Company re-commissioned the following assets at
KTC:
-
- B3 crusher for crushing capacity;
- CM1, CM4, BM1 and BM3 for milling capacity; and
- Flotation banks 801, 821, 802 and 803 for flotation
capacity.
- In 2017, the Company commissioned:
-
- A new pump station for the hydro-mining activities at KITD, to
facilitate production increase from 300tph to 500tph;
- The core copper circuit of phase 1 WOL plant at Luilu;
- A new metallurgical accounting system;
- Two new pipelines from KTC and Luilu for the deposition of
tailings into the Mupine tailings storage facility;
- Six CAT 793 haul trucks at the KOV open pit mine; and
- One CAT 6015 excavator at the KOV open pit mine.
Outlook
During 2018:
- Open pit mining operations are expected to continue to feed ore
to the run-of-mine stockpiles in accordance with the optimized ore
blending strategy, and waste stripping in both KOV and Mashamba
East open pits will continue;
- Hydraulic backfill and care and maintenance activities at KTO
underground operations are expected to continue to ensure
operational readiness for underground operations resuming in future
years;
- Phase 2 construction activities on WOL Project to continue and
are expected to progress according to the 2018 project execution
plan;
- KTC including KITD, and Luilu are expected to ramp-up the
operations to produce copper and cobalt in accordance with the
ramp-up plan;
- Execution of the Acid Plant, cobalt dryers and cobalt
de-bottlenecking projects are expected to continue to ensure the
completion of the planned project schedules;
- The Company reiterates its 2018 production guidance of 150,000
tonnes and 11,000 tonnes of copper cathode and cobalt contained in
hydroxide respectively; and
- Various continuous improvement initiatives relating to
production enhancement and consumable inventory reduction are
expected to be implemented to ensure the efficiency of
operations.
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.
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, phase 2 of the the WOL
Project and the Power Project (as defined in the Annual
Information Form of the Company for the year ended December 31, 2016 dated March 31, 2017); that 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