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Metorex - Agreement Concluded to Treat Ruashi high grade copper/cobalt mineral
resources
METOREX LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1934/005478/06)
Share code: MTX
ISIN : ZAE000022745
(`Metorex`)
AGREEMENT CONCLUDED TO TREAT RUASHI High Grade Copper/Cobalt Mineral Resources
and the Etoile Stockpiles in the Democratic Republic of Congo (DRC).
INTRODUCTION
In line with its strategic objective to develop larger longer life high quality
orebodies, Metorex is pleased to announce that it has reached agreement with the
Government of the DRC, La Generale des Carrieres et des Mines (`Gecamines`) and
Sentinelle Global Investments (Proprietary) Limited (`Sentinelle`) to mine and
treat the high grade copper/cobalt Ruashi orebody and the Ruashi and Etoile
stockpiles situated in the Katanga Province of the DRC approximately 10
kilometres from Lubumbashi.
This agreement constitutes one of the first grants by the Government and
Gecamines to investors under the new mining code promulgated in July 2002.
PROJECT OVERVIEW
Ruashi Mining SPRL (`RM`), a DRC registered company, is the operator and owner
of the mining rights which ownership has been ratified by both the DRC
Government and Gecamines.
The project is to be developed in two phases, the first being the construction
of a concentrator to treat the oxide stockpiles at both Ruashi and Etoile for
approximately 4 years (Phase I). The second phase is the mining of the Ruashi
opencast orebody (Phase II). These are high-grade copper/cobalt resources with a
life in excess of 30 years.
Phase I comprising the mining of the stockpiles will take place at an average
rate of 70 000 tons per month yielding 7 000 to 10 000 tons of copper and 1 100
- 1 300 tons of cobalt per annum in concentrate. Mining of the main Ruashi open
pit orebodies during Phase II is envisaged at a rate of approximately 120 000
tons per month to give +/-40 000 tons of copper and +/-3 000 tons of cobalt per
annum. Phases I and II provide a life of mine of over 30 years.
Regarding the results of the feasibility on Phase I and preliminary study on
Phase II, Metorex and their consultants, GRD Minproc, confirm the robust nature
of the project which at a copper price of $2 200 per ton and cobalt price of $12
per pound provide internal rates of return in excess of 50% at copper cash
costs, net of cobalt credits, below US$0.25c/lb. During Phase I, a bankable
feasibility study will be prepared for Phase II.
MINERAL RESOURCES
The mineral resources are summarised below:
Phase I - Stockpiles
Tons % Cu % Co
Ruashi and Etoile 3 200 000 1.76 0.49
Stockpiles
These reserves constitute probable reserves and inferred resources.
Phase II - Ruashi Orebodies
Tons % Cu % Co
Ruashi 31 900 000 3.59% 0.39%
These reserves constitute proved and probable reserves.
Diamond drilling in excess of 100 000 metres has been carried out on the
orebodies.
Potential exists to exploit the sulphide orebody below the oxides and an
evaluation will be undertaken on the sulphides during Phase I and Phase II.
METALLURGICAL PLANT
A flotation plant will be constructed to treat the stockpiles during Phase I,
producing oxide concentrates. The concentrator sourced from O`Okiep will be re-
erected at Ruashi thereby reducing the capital cost of Phase I. This plant has
been redesigned by GRD Minproc to handle Ruashi ore and has a capacity of 70 000
tons per month. The plant and associated infrastructure are expected to cost
approximately $15million - $18million to establish.
Phase II involves the construction of an expanded concentrator, an acid leaching
section and SX/EW plant for the production of copper and cobalt metal on site.
This metallurgical complex is estimated to require $150m - $180m of capital
expenditure contingent on the scale of operation and ensures higher recoveries
than those obtained during Phase I.
PROJECT FINANCING
Discussions for the financing of both the Phase I and Phase II capital
expenditure have been initiated with interest having been expressed from an
International hedge fund, project financiers and a leading emerging market
private equity fund. The development of the project is contingent on securing of
finance and suitable marketing arrangements for the Phase I oxide concentrate.
Discussions to date suggest that a debt : equity ratio of 60 : 40 with limited
dilution to Metorex, is obtainable and further details will be released on
completion of these arrangements.
RISK ANALYSIS
A country and project risk analysis has been carried out in line with Metorex`s
investment evaluation procedures. The country risk will be addressed by
political risk insurance and the project risk will be addressed by a phased
investment process and the use of well-established copper and cobalt
metallurgical processes. The mining and infrastructure risks are considered
normal for this type of project. To manage the market risk, long term
arrangements are being negotiated with international commodity traders.
PROJECT TIMING
Subsequent to the funding and marketing arrangements, work will commence on the
erection of the plant and mobilisation of the mining contractor. Production is
anticipated to commence within 12 months from site establishment.
The bankable feasibility study on Phase II runs concurrently with Phase I with
the intention of bringing Phase II into production as soon as practical. This
investment is expected to make a meaningful contribution to the Metorex Group`s
earnings.
BY ORDER OF THE BOARD
METOREX LIMITED
Johannesburg
20 May 2004
Sponsor:
Barnard Jacobs Mellet Corporate Finance
(Pty) Limited
Date: 20/05/2004 04:01:08 PM Produced by the JSE SENS Department
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