Metorex Invests $182.3M in Africa
By Charlotte Mathews and Viwe Tlaleane
20 Feb 2007 at 10:21 AM GMT-05:00
resourceinvestor.com
JOHANNESBURG (Business Day) -- Diversified minerals producer Metorex [JSE:MTX] has committed R1.3 billion ($182.3 million) for capital projects, mostly on developing the second phase of its copper and cobalt project at Ruashi, in the Democratic Republic of Congo.
CE Charles Needham said yesterday Metorex had budgeted $160-$180 million for Ruashi 2, but the final cost could be less as the budgeted amount included $10 million for working capital, $6 million for recoverable power costs, $11 million on a cobalt circuit, which might not be needed, and $2 million on feasibility costs already incurred.
Metorex was seeking project finance and was close to finality on the terms.
Work on Ruashi 2 had already started, with first copper production targeted for the first quarter of next year, Needham said. The mine would produce about 45,000 tonnes a month of copper and about 3,500 tonnes of cobalt.
The first phase of Ruashi, a long-life copper and cobalt mine about 10 kilometres from Lubumbashi, had ramped up more slowly than originally expected because of water and metallurgical issues, but it was now at above 75% of design capacity on the mine and about 80% of design capacity on the recovery plant.
The plant, which would cost about $15 million, would be commissioned by September. Metorex was also evaluating a second phase of development to process dumps containing another 4.9 million tonnes of material.
Metorex also announce that its interim diluted headline earnings increases 290% to almost 50 cents per share, after 12.75 cents in the previous comparable period on increased production and higher commodities prices.
“We really are delighted with our results. It’s been a combination of hard work in the past. Our volumes are up about 60% which has certainly been assisted by pricing, but Chibuluma is operating pretty much at capacity and our expansion at Vergenoeg has kicked in,” said Metorex CEO Charles Needham.
Needham said the Chibuluma mine in Zambia is really operating very well. Ore production at Chibuluma South has reached a level of 40,000 tonnes per months at 3% copper, the final design tonnage.
“We are very comfortable with what’s happening, and going forward we are hoping that the second half should produce far better results than the first,” said Needham.
Metorex has also started to build a zinc-processing plant at Sable in Zambia, at the site that houses its plant for processing copper and cobalt mined across the border in the Congo. Needham said the site contained a stockpile of 415,000 tonnes of zinc oxide material which could produce about 5,000 tonnes a year of zinc cathode.
The group has also started a feasibility study in South Africa, in conjunction with the Industrial Development Corporation and a Tunisian company, into the possibility of building an aluminium fluoride plant, potentially costing about R400-R500 million ($56-$70 million), at Richards Bay.
The group’s Vergenoegd fluorspar mine produces about 180,000 tonnes a year of acidspar and about 15,000 tonnes of metspar. But the fluorspar market was finely balanced between supply and demand and it was difficult to place more product, Needham said.
An aluminium fluoride plant, servicing the aluminium industry, would take about another 70,000 tonnes of fluorspar a year, according to the feasibility study.
Metorex is also busy with other small expansion projects. At gold and antimony mine Consolidated Murchison, it is increasing underground development and evaluating reopening two old shafts, Alpha and Gravelotte.
Metorex may not walk away with rights to mine the hotly contested Kipushi zinc and copper deposit in the Democratic Republic of Congo, but Needham said yesterday there was still a possibility it could get a second bite at the cherry.
Kipushi is the potentially huge copper and zinc concession that was held by Adastra Minerals [TSX:AAA], since taken over by First Quantum [TSX:FM] and by Kumba Resources [JSE:KMB], whose base metals operations are now called Exxaro Resources [JSE:EXX].
Last year, the Congo’s mines parastatal, Gecamines, took back Kipushi from First Quantum and Kumba on the grounds, apparently, that they had not developed it. First Quantum and Exxaro have taken the matter to the Belgian courts, which have ruled in their favour. Gecamines’ appeal is due to be heard this week.
It was reported last week to have decided already on the winning bidder. Needham said the contract had not yet been awarded but he did not believe Metorex’s bid was successful.
However, Metorex might get a second opportunity to become involved when the winning bidder was required to show the technical expertise needed to operate the property.
Needham said it’s our understanding that there’s probably 10 bidders, but “they haven’t come out with the successful bidder.” He added that “we’ve created our reputation on our ability to mine ore bodies effectively - so we are waiting to see who the successful bidder is, and we hope we might have a second bite at the cherry from a technical expertise perspective.”
Metorex has built up considerable expertise in zinc mining and processing. It operated a zinc mine, Maranda, near Tzaneen for 14 years and plans to build a zinc processing facility at Sable, in Zambia, to process surface material on the site, which was bought originally to establish a copper and cobalt processing plant.
Needham said Sable’s zinc processing facility would not be large enough to handle Kipushi, which could potentially produce about 70,000 tonnes of zinc a year. Presumably that means that whoever takes on Kipushi will have to establish a new facility, or get a partner to invest in one. With Classic Business Day. |
