TIDMWTI
RNS Number : 9108E
Weatherly International PLC
22 July 2016
22 July 2016
Weatherly International plc
("Weatherly" or "the Company")
Quarterly Operations and Production Update
Weatherly International plc (AIM: WTI) announces its update for
the quarter ended 30 June 2016.
Summary
-- Tschudi production for the quarter was 3,812 tonnes of copper
cathode, with the decrease in production from the previous quarter
being attributable to increased groundwater inflow rates being
experienced at levels which exceed those anticipated in the BFS
-- C1 costs for Tschudi for the quarter were US$4,689 per tonne,
increasing due to the reduced production and actions taken to
manage the groundwater inflow
-- C1 costs for the nine months from 1 October 2015 to 30 June
2016, since Tschudi has been in commercial production, remained
below guidance at US$4,199 per tonne
-- Production of 17,000 tonnes of copper cathode is expected to
be achieved for the year ending 30 June 2017 with forecast C1 unit
costs expected to be in the range of US$4,100-4,200 per tonne
-- Dr Wolf Martinick and Mr Charilaos Stavrakis to retire from the Board
Craig Thomas, CEO of Weatherly, commented:
"The Tschudi operations have been hampered during the quarter by
groundwater inflows significantly higher than predicted during the
feasibility study. Expertise and equipment have been procured to
resolve the issue and full production rates are expected to resume
before the end of the 2016 calendar year.
I would like to take this opportunity to personally thank Dr
Wolf Martinick and Mr Charilaos Stavrakis for their invaluable
contributions and counsel which they have provided in their time as
members of the Board."
Tschudi
Production performance
Production results for the fourth quarter of the financial year
to 30 June 2016
Quarter Quarter Quarter Quarter
ended ended ended ended
Sep-15 Dec-15 Mar-16 Jun-16
------------------------- -------- -------- -------- --------
Total (Ore + Waste)
Mined (000 tonnes) 6,282 6,489 6,091 6,826
------------------------- -------- -------- -------- --------
Ore Tonnes stacked
(000 tonnes) 821 772 583 556
------------------------- -------- -------- -------- --------
Ore Stacked grade
(per cent) 0.73 0.83 0.81 0.88
------------------------- -------- -------- -------- --------
Copper Cathode Produced
(tonnes) 3,554 4,076 4,442 3,812
------------------------- -------- -------- -------- --------
During the quarter, open pit mining operations at Tschudi
reached the depth where the water table was intersected and
groundwater inflow to the pit occurred. Based on hydrogeological
studies, conducted as part of the Bankable Feasibility Study (BFS),
certain rates of groundwater inflow were expected, and the
operation was equipped to deal with the highest level of inflow
rates predicted.
The water inflow rates experienced have, however, exceeded the
highest rates indicated in the BFS studies. As a result it has been
necessary to design, procure and commission additional groundwater
management systems and infrastructure whilst engaging additional
Namibian and international specialist consulting expertise to
assist with this process.
The immediate impact has been a delay in mining the scheduled
ore volumes from the pit to supply to the heap leach operation,
with resulting reductions in copper output.
As such production for the quarter was 3,812 tonnes of copper,
10% below target rates of 4,250 tonnes per quarter. Current
expectations are for production levels in the September 2016
quarter to be approximately 15% below nameplate. Production is then
expected to return to design rates by the end of the December 2016
quarter.
As a result of reduced production, additional costs to deal with
the higher levels of groundwater inflow and adverse exchange rate
movements, C1 costs for the quarter increased to USD4,689 per
tonne.
Despite the events described above, overall for the financial
year just completed (from Commercial Production commencement on 1
October 2015 to 30 June 2016) C1 unit costs of USD4,199 per tonne
were achieved. This figure remains below the bottom end of the
guidance range of USD4,250-4,350 per tonne. On production, after
reaching nameplate production rates for the first time in December
2015, the following six months of operations have delivered 97% of
nameplate output.
The leaching behaviour of ore placed on the heap continues to be
as expected in terms of both leaching rates and acid consumption.
The Solvent Extraction and Electro-Winning plants continue to
perform well, and have demonstrated the ability to produce at 1,500
tonnes per month rates when sufficient copper in solution is
available from the heap.
Provided that groundwater management proceeds as expected, for
the coming financial year to 30 June 2017 the Company still expects
to produce 17,000 tonnes of copper cathode, recovering by financial
year end from any shortfalls expected in the coming months.
Forecast C1 unit costs for the financial year are expected to be in
the range of USD4,100-4,200 per tonne, albeit with expectations
that earlier quarters with lower production levels will incur
higher unit costs than the overall average expected for the
year.
Weatherly has previously advised that if copper prices remain at
current levels it is unlikely that the Company and its subsidiaries
will generate sufficient surplus cash to meet all loan repayments
when due. This remains the case and the Company continues to
positively engage with Orion Mine Finance (Master) Fund I LP on the
subject.
Board Restructuring
As part of continuing efforts to reduce costs, the Company
announces that Dr Wolf Martinick and Mr Charilaos Stavrakis have
retired from the Board, and will not be replaced in the near
term.
Dr Martinick was the co-founder and initial Chairman of the
Company as well as being a key investor in the Company from its
beginnings in 2005. Wolf's vigorous support and encouragement over
the years has been of great value to the Company.
Mr Stavrakis joined the Company in 2013, and has been Chairman
of the Audit Committee since that time. He has provided wise
counsel during a period of considerable financial and business
restructuring.
Their commitment, guidance and advice throughout has been most
valuable and greatly appreciated. The Board wishes them well in
their future undertakings and would like to thank both Directors
for their contributions over the years.
Disputes with LogiMan
Following several disputes between Ongopolo Mining Limited
(OML), the Namibian subsidiary of Weatherly, and LogiMan (the
Engineer-Procure-Construct (EPC) contractor responsible for the
Tschudi plant construction) arising from LogiMan's work on the
Tschudi plant, the Company anticipates that arbitration proceedings
will likely arise to determine those disputes. The Company will
provide further updates on this as appropriate.
For further information please contact:
Weatherly International plc +44 (0) 1707 800 774
Craig Thomas, Chief Executive Officer
Kevin Ellis, CFO and Company Secretary
RFC Ambrian Limited +44 (0) 20 3440 6800
(Nominated Adviser & Broker)
Nominated adviser contact: Stephen Allen or Jonathan
Stephens
Broker contact: Kim Eckhof
Blytheweigh +44 (0) 20 7138 3204
(Financial PR) Tim Blythe / Camilla Horsfall / Nick Elwes
About Weatherly
Weatherly is an AIM listed copper mining company operating in
Namibia in southern Africa. Its principal assets are one operating
open pit copper mine called Tschudi and two underground copper
projects called Otjihase and Matchless.
These assets will enable Weatherly to achieve its medium term
goal of establishing a mining business capable of sustaining
approximately 25,000 tonnes per annum of copper production.
The Company also has a 25 per cent. stake in the AIM listed
company, China Africa Resources plc (AIM: CAF), which is developing
a lead/zinc mine called Berg Aukas, also in Namibia.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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