| Fri 24 Aug 2001, 0:00 | | Zci - Interim Results |
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share code: ZCI
ISIN: ZAE000031738.
Zambia Copper Investments Limited
(Incorporated in Bermuda)
("ZCI" or "the Company")
Registered as an external company in the Republic of South Africa
Company Registration number 1970/000023/10
A member of the Anglo American plc Group
INTERIM RESULTS
Consolidated statement of earnings
for the six months ended June 30, 2001
Audited
Unaudited Year
Six months ended
to June 30 December 31
2001 2000 2000
US$ '000 US$ '000 US$ '000
Loss/profit from mining
operations (41,125) 14 (9,156)
Loss before taxation (53,370) (5,698) (22,663)
Taxation (3,867) (130) 3,522
Loss after taxation (57,237) (5,828) (19,141)
Loss attributable to
minority interests 19,022 238 3,329
Net loss (38,215) (5,590) (15,812)
per ordinary share in US cents
Headline loss before exceptional
item and amortisation of
goodwill (30.95) (4.45) (12.56)
Net loss (31.18) (4.56) (12.90)
Consolidated statement of financial position
for the six months to June 30, 2001
Unaudited Audited
Six months ended Year ended
June 30 December 31
2001 2000 2000
US$ '000 US$ '000 US$ '000
Fixed assets 213,874 133,846 184,415
Stocks 101,669 103,830 112,887
Cash and short-term
investments 7,853 43,752 28,314
Net current assets 90,203 115,027 84,193
Long-term loans 212,967 85,598 120,091
Provisions for liabilities
and charges 78,332 77,832 79,112
Deferred purchase
consideration 63,380 60,000 60,000
Minority equity interests 1,274 23,996 20,296
Shareholders' equity (13,227) 35,210 24,988
Production statistics for KCM
for the six months to June 30, 2001
Six months Six months
ended ended
June 30, December 31,
2001 2000*
Ore mined
Copper ore mined (t) 4,053,000 4,673,000
Cobalt ore mined (t) 766,000 463,000
Metal in concentrate
Copper (t) 70,258 64,428
Cobalt (t) 1,566 1,873
Finished production
Copper (t) 90,485 88,892
Cobalt (t) 1,236 1,228
Metal sales
Copper (t) 93,079 84,732
Cobalt (t) 1,297 1,228
Average price realised
Copper USc/lb 81 85
Cobalt US$/lb 9.77 11.46
* Provided due to there being no comparatives for the period to June 2000 as
ZCI only acquired KCM on March 31, 2000.
Chairman's Statement
During the six month period to June 30, 2001, ZCI incurred a consolidated
net loss of US$38.2 million, due to low copper and cobalt prices and
operational difficulties at ZCI's operating subsidiary, Konkola Copper Mines
PLC (KCM). The directors have not declared an interim dividend in respect of
the year ending December 31, 2001.
The rapid downturn in the world economy has resulted in very low metal
prices that are expected to persist well into next year. Copper prices are
currently less than 70 USc/lb. The outlook for KCM is therefore one of
continued financial constraints in the near term.
Following the acquisition of the Konkola, Nchanga and Nampundwe assets from
ZCCM on March 31, 2000, KCM embarked upon a major refurbishment programme at
an estimated total capital cost of US$270 million. The aim of the programme
is to address the under-investment in the business that had previously
occurred and systematically to reduce the high unit operating costs at the
existing operations. By the end of June 2001, some US$112 million had been
expended.
While refurbishment of the assets of KCM has continued, metal production did
not increase to expected levels during the first half of 2001. This was
mainly due to difficulties experienced at the toll smelting facility at
Nkana, which resulted in excess stocks of copper concentrate, amounting to
some 20,000 tonnes of contained copper, ahead of the smelter. The
operational difficulties at the smelter are being addressed with a shutdown
in July and August 2001 for major rehabilitation. The excess stocks of
copper concentrate are expected to be treated during the first half of 2002.
Production at the Konkola mine has also been disappointing due to delays in
underground development. As a result, production for the six months was only
marginally higher than in the previous six months. Accelerated development
work is being undertaken by KCM, which should result in improved performance
in the remainder of the year.
As previously announced, there was a catastrophic slope failure at the
Nchanga Open Pit in April 2001 which resulted in the movement of some 5
million tonnes of material and the deaths of ten employees. A further two
employees also suffered fatal accidents in unrelated incidents during the
six months. These tragic events are clearly unacceptable and my colleagues
on the Board and I wish to convey our condolences to the families of the
deceased. The management of KCM continues to make strenuous efforts to build
a culture of safety on the mines. Whilst production at the Nchanga Open Pit
resumed within one month of the accident, the new mining plan and the future
economics of the pit continue to be evaluated. The accident had a severe
impact on production at KCM, which is expected to persist for some time.
In total, the shareholders of KCM have committed to provide funding of
US$370 million, of which ZCI's share is US$310 million. Anglo American plc,
the 50.9% shareholder of ZCI, is currently providing loan facilities to ZCI
in an amount of US$310 million to meet this commitment of which ZCI has
drawn down US$132 million. However, as previously advised to shareholders
of ZCI, the Company will seek appropriate means of raising the necessary
long-term capital required to meet its commitments to KCM.
The Konkola Deep Mining Project (KDMP) feasibility study was completed
during the period and is currently being reviewed. KDMP will be a long-life
mine with significantly lower operating costs than the existing operations
and represents the main rationale for the acquisition of the assets. KCM
and its shareholders are in the process of considering the implications of
the current low metal prices on the optimal financing strategy for KDMP. The
Board will revert to shareholders with its proposals in due course.
The Board of ZCI wishes to record its appreciation of the great efforts made
by all the employees of KCM during what has been an exceptionally difficult
six month period for the Company.
Interim Report
The Company's interim report of June 30, 2001 will be posted to shareholders
on or about September 5, 2001. Copies may be obtained from the transfer
secretaries, Computershare Services Limited, Second Floor, Edura, 41 Fox
Street, Johannesburg 2001 (PO Box 61051, Marshalltown 2107, South Africa)
and Computershare Investor Services PLC, PO Box 82, The Pavilions,
Bridgwater Road, Bristol BS99 7NH or from the Company's French listing
agents, Euro Emetteurs Finance, 48 boulevard des Batignolles, 75850 Paris
Cedex 17, France.
Bermuda
August 24, 2001
Registered Office: Clarendon House, 2 Church Street, Hamilton, Bermuda
Website: www.zci.lu
