ZUG, Switzerland, Feb. 13, 2020 /CNW/ - Katanga Mining Limited
(TSX: KAT) ("Katanga" or the "Company") today announces its
financial results for the fourth quarter and 2019 fiscal year.
Katanga's Financial Statements and Management's Discussion and
Analysis ("MD&A") will be available on SEDAR,
www.sedar.com.
Operating Results
|
|
Three months
ended
|
Twelve months
ended
|
|
|
|
|
|
|
Dec
31,
2019
|
Sep 30,
2019
|
Dec 31,
2018
|
Dec
31,
2019
|
Dec 31,
2018
|
Sales*
|
$'000
|
382,572
|
347,794
|
344,708
|
1,386,313
|
1,265,094
|
Mining, processing
and other costs
(net of changes in metal
stocks)*
|
$'000
|
(264,180)
|
(272,689)
|
(320,726)
|
(1,141,976)
|
(773,331)
|
Royalties and
transportation costs*
|
$'000
|
(72,848)
|
(70,904)
|
(54,326)
|
(268,172)
|
(201,682)
|
Depreciation and
amortization
|
$'000
|
(122,804)
|
(109,744)
|
(85,721)
|
(346,270)
|
(276,638)
|
Gross (loss)
profit
|
$'000
|
(77,260)
|
(105,543)
|
(116,065)
|
(370,105)
|
13,443
|
|
|
|
|
|
|
|
Other income
(expenses)*
|
$'000
|
(5,435)
|
(5,844)
|
(14,456)
|
(12,177)
|
(24,651)
|
Write-offs / loss on
disposal of property, plant and
equipment*
|
$'000
|
(749)
|
(555)
|
(8,088)
|
(31,945)
|
(50,237)
|
Net finance
costs
|
$'000
|
(150,813)
|
(106,420)
|
(111,762)
|
(490,423)
|
(461,450)
|
Restructuring
expenses
|
$'000
|
-
|
-
|
-
|
-
|
(248,128)
|
Fines and
penalties
|
$'000
|
-
|
-
|
(22,248)
|
-
|
(22,248)
|
Income tax
expense
|
$'000
|
(3,702)
|
(8,395)
|
(3,557)
|
(18,637)
|
(12,940)
|
Net loss and
comprehensive loss
|
$'000
|
(237,959)
|
(226,757)
|
(276,176)
|
(923,287)
|
(806,211)
|
Non-controlling
interests
|
$'000
|
(26,431)
|
(41,189)
|
(48,718)
|
(152,978)
|
(97,775)
|
Attributable to
shareholders of the Company
|
$'000
|
(211,528)
|
(185,568)
|
(227,458)
|
(770,309)
|
(708,436)
|
|
|
|
|
|
|
|
Adjusted
EBITDA*
|
$'000
|
39,360
|
(2,198)
|
(52,888)
|
(67,957)
|
215,193
|
|
|
|
|
|
|
|
Basic and diluted
loss per common share
|
$/share
|
($0.05)
|
($0.10)
|
($0.12)
|
($0.19)
|
($0.37)
|
C1 costs**
|
$/pound
|
2.30
|
2.50
|
2.53
|
2.59
|
1.79
|
*
|
The aggregation of
sales, mining, processing and other costs, royalties and
transportation costs, other income (expenses) and write-offs / loss
on disposal of property, plant and equipment are included within
adjusted EBITDA (Refer to item 22 of the Company's MD&A
'Non-IFRS measures').
|
**
|
C1 costs after
by-product credit. Refer to item 22 of the Company's MD&A
'Non-IFRS measures'.
|
|
|
Three months
ended
|
Twelve months
ended
|
|
|
|
|
|
|
Dec
31,
2019
|
Sep 30,
2019
|
Dec 31,
2018
|
Dec
31,
2019
|
Dec 31,
2018
|
Copper
revenue
|
$'000
|
372,381
|
320,264
|
270,765
|
1,327,959
|
867,917
|
Cobalt
revenue
|
$'000
|
10,192
|
27,530
|
73,943
|
58,354
|
396,914
|
Concentrate
revenue
|
$'000
|
-
|
-
|
-
|
-
|
263
|
Total
revenue
|
$'000
|
382,573
|
347,794
|
344,708
|
1,386,313
|
1,265,094
|
Including net
provisional pricing adjustment
|
|
13,903
|
7,389
|
(10,012)
|
20,514
|
(4,318)
|
|
|
|
|
|
|
|
Copper cathode
sold
|
tonnes
|
63,864
|
60,530
|
48,686
|
234,495
|
145,743
|
Cobalt contained in
hydroxide sold
|
tonnes
|
1,324
|
1,308
|
1,430
|
4,257
|
7,343
|
Copper contained in
concentrate sold
|
tonnes
|
-
|
-
|
-
|
-
|
73
|
|
|
|
|
|
|
|
LME average
copper price
|
$/pound
|
2.67
|
2.63
|
2.80
|
2.72
|
2.96
|
Realized copper
price*
|
$/pound
|
2.22
|
2.02
|
2.10
|
2.15
|
2.23
|
MB average
cobalt price
|
$/pound
|
15.82
|
14.82
|
31.68
|
15.91
|
36.79
|
*
|
Realized copper
prices are based on gross copper revenue (above) after deducting
realization charges, royalties and other selling
expenses.
|
The movement in revenue is due to the following price and
volume factors:
- Copper revenue increased to $372.4
million in Q4 2019 from $320.3
million in Q3 2019. Copper revenue increased to $1,327.9 million in 2019 from $867.9 million in 2018. The increase in copper
revenue in Q4 2019 versus Q3 2019 was due to higher copper sales
and an increase in the realized copper price. During Q4 2019, an
additional 3,334 tonnes were sold, compared to Q3 2019. Markets
improved and the realized copper price was also 10% higher on
average than during Q3 2019 which also contributed to the
additional revenue. The increase in copper revenue during 2019
versus 2018 is due to the increase in copper sales driven by the
WOL project ("WOL Project") ramp-up, partially offset by a lower
realized copper price. Compared to 2018, an additional 88,752
tonnes of copper cathode was sold during 2019. However, the
realized copper price was 5% lower on average compared to 2018.
- Cobalt revenue decreased to $10.2
million in Q4 2019 from $27.5
million in Q3 2019. Cobalt revenue decreased to $58.4 million in 2019 from $396.9 million in 2018. The decrease in cobalt
revenue in Q4 2019 versus Q3 2019 was primarily due to a quality
adjustment processed in Q4 2019. This was partially offset by
increased sales volumes during Q4 2019 and a higher realized cobalt
price.
- Included within sales is a net provisional pricing adjustment
resulting from movements in the commodity price between the date of
sale and the final pricing, based on average prices for a specified
contractual period thereafter. At each reporting date,
provisionally priced sales that have not been finalized, retain an
exposure to future changes in prices and are marked-to-market,
based on London Metal Exchange ("LME") and Metal Bulletin ("MB")
forward prices. The final tonnage and pricing are subject to final
assayed results. These adjustments are recorded in sales in the
consolidated statements of loss and comprehensive loss and within
receivables on the consolidated statements of financial position.
These embedded derivatives, comprising provisional pricing,
included in receivables, are classified within level 2 of the fair
value hierarchy.
The movement in cost of sales, depreciation, royalties and
transportation costs comprises:
|
|
Three months
ended
|
Twelve months
ended
|
|
|
|
|
|
|
Dec
31,
2019
|
Sep 30,
2019
|
Dec 31,
2018
|
Dec
31,
2019
|
Dec 31,
2018
|
Open pit mining
costs
|
$'000
|
34,686
|
38,006
|
37,283
|
132,124
|
116,985
|
Underground mining
costs
|
$'000
|
18,427
|
13,437
|
14,003
|
61,551
|
51,107
|
KTC processing
costs
|
$'000
|
18,927
|
22,331
|
28,533
|
91,375
|
81,260
|
Luilu refinery
costs
|
$'000
|
153,001
|
141,777
|
113,937
|
577,820
|
300,736
|
Change in metal
stock
|
$'000
|
(34,062)
|
(36,179)
|
11,806
|
(83,210)
|
(63,355)
|
Mine infrastructure
and support costs
|
$'000
|
73,201
|
93,317
|
114,544
|
358,779
|
283,494
|
Expense on issue of
capital spares to production
|
$'000
|
-
|
-
|
620
|
3,537
|
3,104
|
Depreciation and
amortization
|
$'000
|
122,804
|
109,744
|
85,721
|
346,270
|
276,638
|
Royalties and
transportation costs
|
$'000
|
72,848
|
70,904
|
54,326
|
268,172
|
201,682
|
Total cost of
sales
|
$'000
|
459,832
|
453,337
|
460,773
|
1,756,418
|
1,251,651
|
Review of Expenses for the Three Months and Year ended
December 31, 2019:
- Gross loss decreased to $77.3
million in Q4 2019 from $105.5
million in Q3 2019. Gross loss increased to $370.1 million in 2019 from $13.4 million gross profit in 2018. The
decrease in gross loss in Q4 2019 compared to Q3 2019 was due to
increased revenue together with reduced costs of production. The
increase in revenue was due to an increase in tonnes sold and
increased realized prices as noted above. The decreased production
costs are the result of improved efficiencies attained in the
production process which resulted in lower costs, partially offset
by increased depreciation due to increased production volumes. In
addition, the provision for obsolete inventory decreased by
$11 million during Q4 2019.
The increase in gross loss in 2019 compared to 2018 gross profit
was driven by reduced cobalt revenue (volume and price), higher
reagent costs at Luilu and an increase in total volumes processed,
in line with the optimized mine plan. These were partially offset
by an increase in copper revenue due to increased copper sales as
noted above. In addition, the inventory obsolescence provision was
increased by $52 million during 2019
which resulted in an additional expense.
- Open pit mining costs decreased to $34.7
million in Q4 2019 compared to $38
million in Q3 2019. Open pit mining costs increased to
$132.1 million in 2019 from
$116.9 million in 2018. The decrease
in open pit mining costs during Q4 2019 was due to a decrease in
total material mined. Total material mined was lower due to
decreased production at Luilu as a result of the processing
constraints from the EW2 refurbishment as well as to a planned
slowdown in order to begin implementing efficiency initiatives. The
increase in open pit mining costs during 2019 compared to 2018 was
due to longer haulage distances and cycle times, additional costs
incurred due to changes in the maintenance strategy and higher
blasting costs.
- KTC processing costs decreased to $18.9
million in Q4 2019 from $22.3
million in Q3 2019. KTC processing costs increased to
$91.3 million in 2019 from
$81.2 million in 2018. KTC processing
and operational costs have moved in line with the amount of
material milled during the respective periods. The decrease during
Q4 2019 is mainly due to the throughput constraints at the Luilu EW
plant.
- Luilu refinery costs increased to $153
million in Q4 2019 from $141.8
million in Q3 2019. Luilu refinery costs increased to
$577.8 million in 2019 from
$300.7 million in 2018. Luilu
refinery costs increased due to increased reagent costs, mainly due
to increased sulphuric acid prices and consumption and increased
lime prices and an increase in total oxide feed from KTC, in line
with the optimized mine plan.
- Royalties and transportation costs increased to $72.8 million in Q4 2019 from $70.9 million in Q3 2019. Royalties and
transportation costs increased to $268.1
million in 2019 from $201.7
million in 2018. Royalties and transportation costs have
increased due to higher copper revenues and sales tonnes. The 2019
negative variance versus 2018 includes the impact from
implementation of the 2018 Mining Code, which changed the basis of
royalties from a net revenue to gross revenue basis, increased base
royalty rates and cobalt being declared a "strategic mineral
substance" and taxed at a higher royalty of 10% of gross revenue
from Q4 2018 (previously 3.5%).
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, 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.
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