DRC copper mining project kicks of despite election frenzy

By agencies

JOHANNESBURG, South Africa- Diversified-miner Metorex announced on Wednesday that it would accelerate the development of the second phase of its copper-cobalt project in the Democratic Republic of Congo (DRC), as revenue from its copper division surged by 382%.
Delivering the company’s results to June 30, in Johannesburg, CEO Charles Needham said that the commissioning date of the 120 000-t/m plant had been brought forward by more than a year to the first quarter of 2008. The initial date for start-up was only in July 2009.
Fast-tracking the development was underpinned by Metorex’s drive to boost earnings by focusing on “long-term, high-margin projects” and internal expansion to improve its levels of production, he said.
The bankable-feasibility study for Ruashi II had been completed and site procedures had also started. Metorex appointed the technical, construction and financial consultants and sourcing of electrical and mechanical components for the expanded plant was also under way.
The Ruashi project is located some 10 km from Lubumbashi and Metorex owned a 67% stake, which Needham said it would like to increase.
Overall, Metorex improved its earnings a share by 302% to 54,3c and headline earnings increased by 288% to 47,7c. The group’s revenue increased by 41% from R1,03-billion to R1,45-billion and Ebitda rose by 148% from R150-million to R371-million.
The company also generated cash of some R351,8-million, with R479-million spent on capital projects, mainly Ruashi and Sable, leaving it with a cash balance of R88,2-million.
Needham said that Metorex had not, yet, finalized financing for the development of Ruashi II, adding that it planned to ring-fence the project and that the company would have significant cash available at year-end 2006/7.
Meanwhile, Metorex also planned to spend some R14-million on exploration in 2006/7, mainly in the DRC and Zambia.
Its exploration targets comprise two copper-cobalt projects in the DRC, Musonioi and Sokoroshi; two copper projects in Zambia, Kasempa and Chifupu; and the zinc tailings-treatment plant in Zambia.
Commenting on the company’s view on doing business in the DRC, currently under strain from political pressure owing to the democratic elections, Needham said that it was confident that political pressure would not affect its projects and that it would not stop the company from accelerating its Ruashi project.
During the year under review, Metorex sold its coal division, which contributed 30% to its sales revenue and 21% to its earnings. But he said that the company’s exiting the coal market might only be temporary as it would consider buying other coal assets should the right ones become available.
Also in the year under review, Metorex completed the Vergenoeg fluorspar expansion project, commissioned the Sable processing facility and ramped up its Chibuluma South copper mine to full capacity of 40 000 t/m.
With this mine now contributing 40 000 t/m of copper, copper was expected to contribute 72% to Metorex’s Ebitda in 2007. In the past financial year, copper contributed 37% to earnings. Needham pointed out that the increased contribution from copper did not mean that the non-copper commodities, fluorspar, gold and antimony, would become smaller in absolute values.
“The group is confident that its expansions at its fluorspar operation, the fine tuning of the gold division, the achievement of full production at Chibuluma, and commencement of production at Ruashi Mine and the Sable processing facility, combined with the sustained robust commodity prices and marginally weaker rand should lead to continued earnings growth despite the exclusion of the coal division’s earnings,” Metorex said in the notes accompanying its financial results.