| Wed 28 Apr 2010, 17:47 | | MTX - Metorex Limited - Quarterly Operational And General Update |
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MTX
MEMTX
MTX - Metorex Limited - Quarterly Operational And General Update
Metorex Limited
(Incorporated in the Republic of South Africa)
(Registration number 1934/005478/06)
Share code: MTX
ISIN: ZAE000022745
Issuer code: MEMTX
("Metorex" or "the Company" or "the Group")
QUARTERLY OPERATIONAL AND GENERAL UPDATE
Chief Executive Officer Terence Goodlace said "The Metorex Group is now well
positioned to advance its growth strategy following the completion of the US$
120 million capital raising announced on 19 April 2010 ("the claw back offer").
Since the June 2009 financial year end and subsequent to having raised US$120
million through a claw back offer and following partial repayment of the Ruashi
debt, the gross and debt net of cash balances reduced by 46 per cent and 77 per
cent respectively. Quarterly copper production increased overall by 2 percent
for the quarter to 12 880 tons and cobalt production declined marginally to 810
tons. Rectifier problems during January 2010 at Ruashi reduced copper
production there by some 950 tons. The Group has now rapidly moved to mobilize
teams for all associated activities needed to advance exploration drilling and
feasibility studies for the three new development projects in the DRC namely
Kinsenda, Lubembe and Dilala East."
Table 1: Metorex quarterly production statistics:
Commodity Unit 3 Months 3 Months 3 Months % Change Year to
ended ended ended March Q3 vs Q2 date
September December 2010 March
2009 2009 (Q3 F2010) 2010
(Q1 F2010) (Q2 F2010)
Copper - (t) 4 573 3 846 4 393 14% 12 812
Chibuluma
Copper - (t) 1 943 1 270 1 444 14% 4 657
Sable
Copper - (t) 5 690 7 518 7 043 (6%) 20 251
Ruashi
Copper - (t) 12 206 12 634 12 880 2% 37 720
subtotal
Cobalt - (t) 12 11 15 36% 38
Sable
Cobalt - (t) 666 812 795 (2%) 2 273
Ruashi
Cobalt - (t) 678 823 810 (2%) 2 311
subtotal
Table 2: Metorex quarterly sales statistics:
Commodity Unit 3 Months 3 Months 3 Months % Change Year to
ended ended ended Q3 vs Q2 date
September December March March
2009 2009 2010 2010
(Q1 F2010) (Q2 (Q3 F2010)
F2010)
Copper - (t) 4 613 3 866 4 337 12% 12 816
Chibuluma
Copper - (t) 1 927 1 279 1 422 11% 4 628
Sable
Copper - (t) 4 986 8 052 7 349 (9%) 20 387
Ruashi
Copper - (t) 11 526 13 197 13 108 (1%) 37 831
subtotal
Cobalt - (t) 13 9 12 33% 34
Sable
Cobalt - (t) 801 683 903 32% 2 387
Ruashi
Cobalt - (t) 814 692 915 32% 2 421
subtotal
Commentary on production and sales for the quarter ended 31 March 2010
Group copper and cobalt production was in line with the performance of the
previous quarter despite the rectifier problems experienced by Ruashi during
January 2010.
Copper
Ruashi copper production declined by 6 per cent when compared to the previous
quarter as a result of rectifier and thyristor problems experienced during
January 2010. These impacted on 10 days of production and reduced production by
some 950 tons of copper. The quarterly tonnage milled at Ruashi decreased by 2
per cent from the previous quarter to 321 235 tons at an average blended copper
head grade of 2.95 per cent and a blended cobalt head grade of 0.46 per cent.
Ruashi continues to improve output and it is pleasing to report that the mine
produced 2 857 tons of copper in March 2010. Ruashi delivered 5 850 tons of
copper (83 per cent of the quarter`s production) against its hedge book during
the quarter.
Chibuluma`s copper production increased by 14 per cent due to higher delivered
copper head grades of 3.61 per cent as well as higher concentrate recoveries of
95 per cent. The primary crusher was replaced during the quarter which reduced
output during February 2010.
The Sable facility increased copper production by 14 per cent to 1 444 tons of
copper on the back of the increased 3rd party ore feed.
It is estimated that Metorex copper production will increase to around 14 000
tons for the June 2010 quarter.
Cobalt
Ruashi Cobalt production declined by 2 per cent when compared to the previous
quarter which was also due to the production problems experienced at Ruashi
during January 2010. For the month of March 2010, Ruashi produced 306 tons of
contained cobalt. Cobalt sales increased by 32 per cent from the previous
quarter as the transport efficiencies of cobalt from Lubumbashi to Johannesburg
continued to improve. It is estimated that Ruashi will produce 775 tons of
cobalt in the June 2010 quarter.
Group debt position
During the quarter ended 31 March 2010, the Group`s gross debt position reduced
by R335 million to R1.1 billion at an exchange rate of R7.28 to the US$1.00.
Chibuluma continued to service its term loan with a repayment installment of
US$4 million having been made during March 2010.
Funds received from subscribers to the claw back offer were partially applied to
the further reduction of Group debt. A prepayment of US$35m was applied to the
Ruashi Standard Bank Project Finance Facility which has triggered a more
favourable Ruashi Debt Package. In addition R30 Million was applied to the
repayment of a Metorex overdraft from Investec Bank.
Table 3: Group debt position:
Entity Nature 3 Months 3 Interest Term
ended Months
December ended
2009 March
(Rm) 2010
(Rm)
Ruashi Jinchuan 155 137 Fixed 36 months
pre-offtake 4,68% from January
finance 2010
Ruashi ECIC 824 593 US Libor 7 semi-annual
facility +1.25% from 1
January 2011
Ruashi Commercial 193 140 US Libor 5 semi-annual
facility + 2,75% from 1
to 3.5% January 2011
Chibuluma Term loan 237 204 US Libor 9 semi-annual
+4.85% from 30
September
2009
Various 69 69 Various One to three
years
TOTAL GROSS DEBT 1 478 1 143
Cash balances 201 663*
TOTAL NET DEBT 1 277 480
*Includes the cash received post finalisation of the rights offer
Group commodity hedgebook status:
The Group hedge book has been restructured such that it now considerably
mitigates the impact on Ruashi and Chibuluma to service their respective debt
profiles in the event of negative movements in the copper price.
Table 4: Group hedging positions:
Commodity Maturity Volume Copper Comment
(months) (tons) Price
(US$/t)
Copper: Ruashi 3 (April 2010 - 5 850 3 900 Forwards
June 2010)
Ruashi 12 (July 2010 - 16 200 5 972 Forwards
June 2011)
Ruashi 12 (July 2011 - 12 000 6 600 - 7 Zero Cost
June 2012) 600 Collar
Chibuluma 3 (April 2010 - 4 625 6 274 Forwards
June 2010)
Chibuluma 6 (July 2010 - 3 000 7 000 - 8 Zero Cost
December 2010) 065 Collar
Chibuluma 6 (January 2011 - 3 000 6 805 - 8 Zero Cost
June 2011) 000 Collar
Growth projects
The feasibility studies on the DRC Growth Projects consisting of Kinsenda,
Dilala East and Lubembe were progressed during the quarter. This should take
the Dilala East and Kinsenda feasibility studies to Bankable Feasibility Study
("BFS") level, and the Lubembe study to Pre-Feasibility Study level ("PFS") by
December 2010.
At Kinsenda, drill crews have been mobilized and the drilling of 7 500 metres of
infill and twin hole drilling commenced in mid-April for completion by early
July 2010. This drilling will provide quantitative data for comparison against
historical data to allow conversion of the mineral resource to a fully SAMREC
compliant mineral resource. Infill drilling of the resource blocks selected for
the first five years of production will be completed.
Independent consultants have been appointed for the environmental, social,
geotechnical, geohydrological, mining, metallurgical and tailings disposal
studies for the Kinsenda BFS. The BFS will be managed by Venmyn (Pty) Ltd.
A SAMREC compliant mineral resource of the Dilala East project was released on 1
March 2010, which estimated 563 000 tons of copper and 170 000 tons of cobalt.
This mineral resource estimation used boreholes up to and including MM48.
An additional 8 holes have subsequently been completed, of which 5 intersected
significant mineralisation and 3 failed to intersect mineralisation as a result
of abandonment due to poor ground conditions or having defined the limit of
mineralisation. Drilling activities continue to, infill drill the resource to a
depth of 400 metres, and to establish extensions of the orebody below the 400
metres below surface level. The Dilala East orebody remains open ended at
depth.
Metallurgical testwork on the Dilala East sulphide deposit has progressed during
the quarter. Various process flowsheet options have been completed at Mintek,
which will be used for the selection of an optimal metallurgical process plant
design for the Bankable Feasibility Study.
Work has commenced on a SAMREC compliant mineral resource estimate for Lubembe
which will be released in the June quarter. A conceptual mining study will
immediately commence once the mineral resource estimate has been completed.
This study will provide guidance on the appropriate mining method, size and
scope of the project and will guide the environmental, geotechnical,
metallurgical and infrastructure design aspects of the PFS.
Infill and extensional drilling activities are expected to commence on the
Lubembe Prospect once the drilling at Kinsenda is completed. A baseline
environmental and social study is also scheduled to commence on the Lubembe
Prospect in the coming quarter.
The information contained in this announcement has not been reviewed or reported
on by the Metorex`s auditors.
Johannesburg
28 April 2010
For further enquiries please contact:
Metorex CEO, Terence Goodlace Tel: 011 880 3155
CFO, Maritz Smith
College Hill Jacques de Bie Tel: 011 447 3030
Sponsor
Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Date: 28/04/2010 17:47:11 Produced by the JSE SENS Department.
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