JOHANNESBURG (Business Day) -- Diversified miner Metorex [JSE:MTX] has boosted its copper capacity threefold and its fluorspar capacity 16% in the past financial year, CEO Charles Needham said yesterday.
The group is to report its financial results for the year to June within the next three months. Needham said Metorex's actual production had not necessarily met design capacity yet, especially in copper where the Ruashi I project in the Democratic Republic of Congo was still in the ramp-up phase.
At Ruashi I, production capacity was 10,000 tonnes of copper a year and 1000 tonnes of cobalt a year. Actual production of copper this year would be 70%-75% of capacity. Cobalt would be 20%-25% of capacity because management had initially focused on copper.
At the Chibuluma Copper Mine in Zambia, about 40,000 tonnes of ore a month was being mined to produce 15000 tonnes of copper a year. Metorex planned to increase the mining rate to 50,000 tonnes of ore a month, which would have a similar effect on production of finished copper as long as grades were maintained, Needham said. As the mine deepened, grades were increasing.
Metorex was on track to produce its first copper from the $160-$180 million Ruashi II project by January, he said. The final capital cost would depend on whether the mine beneficiated to copper carbonate or metal stage.
Asked about recent moves by the governor of Katanga province, where Ruashi is situated, to halt all exports of unbeneficiated copper from the Congo, Needham said Metorex was beneficiating to concentrate stage. While it was still uncertain whether this would be acceptable, Needham said the company had built up credibility with the governor.
Metorex's fluorspar mine at Vergenoeg in SA had increased production capacity to 180,000 dry tonnes this year from 155,000 tonnes last year.
Vergenoeg GM Dennis Cooke said the main potential for growth lay in Alfluorco, a project at pre-feasibility study stage to build a R500 million (US$71.8 million) hydrofluoric acid processing plant.
Alfluorco would increase Vergenoeg's production by about 70,000 tonnes to 250,000 tonnes a year at a preliminary capital cost estimate of R70 million (US$10 million).
Cooke said fluorspar prices were stable to positive after the closure or production difficulties of some producers and reduced exports from China as it consumed more of its own fluorspar. Fluorspar is used in a number of consumer applications including toothpaste, glass and refrigerants.
In future, it could be possible for Vergenoeg to sell fluorspar to China, Cooke said.
In other news, Metorex has acquired 38.,7% of Copper Resources Corporation (CRC) and a 5% stake in Miniere De Musoshi Et Kinsenda Sarl (MMK), a 75% owned subsidiary of CRC, for about R600 million ($86.25 million).
A further offer to minority shareholders of CRC at the same price is to follow this transaction, Metorex said in a statement.
The acquisition, which increases Metorex's contained copper resource by about 2.4 million tonnes, will be paid for by an issue of 25 million ordinary Metorex shares. This share issue will increase the weighted number of shares by 8.48%.
Metorex said the transaction was expected to reduce earnings per share by 2.41% to R49.80 cents but increase the net asset value per share by 44.13% to R516 cents.
In terms of the deal, Metorex will acquire 29,247,126 ordinary CRC shares for about R512 million (US$73.5 million), together with five ordinary MMK shares for about R88 million (US$12.6), from the Forrest Group.