| Fri 11 Jun 2004, 16:25 | | NEWS RELEASE |
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Metorex Limited - News Release
Metorex Limited
(Incorporated in the Republic of South Africa)
(Registration number 1934/005478/06)
Share code: MTX
ISIN : ZAE000022745
(`Metorex` or `the Group`)
NEWS RELEASE
Shareholders were advised in the interim report that as no statutory requirement
exists for quarterly reporting by Metorex that these reports would be
discontinued. However, in order to keep shareholders apprised of specific
aspects of the Group`s activities and performance, an update of the Group status
is set out below:
1. Issue of Shares for Cash
On 5 March 2004, Metorex issued a further 11.8million shares at a price of
234 cents per share, thereby raising R27.6million. This issue was actively
supported by institutional shareholders which support is greatly appreciated.
2. Management Action Programme
The Management Action programme on productivity, production and cost
control, implemented during mid-2003, has taken effect and is borne out in an
improvement in the Group`s earnings and furthermore provides an optimistic
outlook for future earnings from the Group.
3. Earnings
Shareholders are aware that the Group incurred a 12.3 cents loss per share
for the first half year with an average rate of R7.43/US$1.
Whilst there was little change in the exchange rate, the third quarter loss
was reduced from that of the second quarter. The Group has an optimistic view on
the final quarter of the financial year and earnings are expected to show an
improvement on the previous six months.
4. Commodity Prices and Exchange Rate
The sustained strength of the Rand has provided Metorex with new challenges
where effective operational adjustments have been made. These actions have
resulted in an improvement in Group earnings. The commodity prices of base
metals have, to some degree, offset the strength of the Rand. In world terms,
the commodity market is experiencing a boom period that has not been seen in the
last 20 years and Metorex is well positioned to participate therein.
5. Review of Operations
5.1 Barberton Mines
Metorex has been operating the Barberton Mines complex for a period of 1 year
and has met its loan covenants and ratios through its sustained and satisfactory
performance. Barberton Mines is now free to distribute dividends, the first of
which is expected by the end of the financial year being June 2004. In addition,
a regional exploration programme to expand the existing reserves and seek
potential future orebodies has commenced.
5.2 Vergenoeg
The Vergenoeg operation has performed particularly well during the year with
increased production levels, achieving world standard quality product, opening
up new North American markets and has benefited from the international Fluorspar
price increases of up to 35%.
5.3 Coal Operations
All of the collieries have performed well during this financial year. The
highlight of the year has been the commissioning of the new mine, Middelburg
Townlands. The mining licence was granted by the DME, the plant has been
commissioned, with thanks to the consultants and sub-contractors, and production
commenced on 1 June 2004. This new mine will increase production by in excess of
35% and will produce a proportion of higher priced, low phosphorus, high premium
coal for the char industry.
5.4 Chibuluma Complex
The Chibuluma West Mine is nearing the end of its economic life and is forecast
to produce copper and limited cobalt until the end of this calendar year.
The Chibuluma South Mine development is progressing from both the decline and
the ventilation shaft. A ventilation shaft/second outlet has been reached to the
first level of the orebody. Up dip developing of the decline shaft has commenced
to meet the surface decline underground. The decline is currently in poor
ground, which has largely been overcome. Production from the Chibuluma South
Mine is expected to commence during September 2004 with a build up to 20 000
tons per month over a period of 6 months and 40 000 tons per month within a 12
month period thereafter. The Chibuluma South orebody is a quality orebody in
world terms and is expected to contribute significantly to the Group`s earnings.
5.5 Consolidated Murchison
The gold production from Consolidated Murchison has been below expectation but
the antimony production has been above budget. The mine is highly sensitive to
the Rand/Dollar exchange rate and has returned to profitability as a result of
the RAMP programme initiated in 2003.
5.6 O`Okiep Copper Company
The lower copper grade from the Slag Dump resulted in the reopening of two
underground reserves adjacent to the plant. This underground ore has lifted the
feed grade to the mill and enhanced copper production. Additional underground
development to expose a further orebody is progressing well and is planned to
increment production for a period of 18 to 24 months. An impairment provision
will be reviewed at year end.
5.7 Future
The Group is seeking longer life, quality orebodies for its future growth and
development. In this regard, Metorex has recently acquired an effective 52%
interest with an option to increase this percentage, in the Ruashi/Etoile
stockpiles and Ruashi orebody situated in the Democratic Republic of Congo.
These stockpiles and orebody are high grade, quality ore resources with a life
of mine in excess of 30 years. The Group will limit its capital exposure to this
programme by moving the Nigramoep concentrator from O`Okiep and a limited cash
investment. The Ruashi project is expected to provide high investment returns
and make a major contribution to the Group`s earnings.
The Vergenoeg Mine is a long life, high quality orebody, the Chibuluma South
Copper Mine has a life in excess of 14 years with high-grade copper ore and the
Barberton gold resources indicate mine lives in excess of 15 years.
BY ORDER OF THE BOARD
Johannesburg
11 June 2004
Sponsor:
Barnard Jacobs Mellet Corporate Finance
(Pty) Limited
Date: 11/06/2004 04:15:03 PM
Produced by the JSE SENS Department
