LONDON, UNITED KINGDOM -- (Marketwire) -- 09/08/09 -- Katanga Mining Limited (TSX: KAT) ("Katanga" or the "Company") today announced its intention to accelerate the ramp-up of its project in the Katanga Province in the Democratic Republic of Congo ("DRC") to 150,000 tons of copper and 8,000 tons of cobalt per annum (the "Accelerated Development Plan") through the earlier completion of the construction of Phases 3 and 4, as disclosed in the technical report (the "Technical Report") of the Company dated March 31, 2009. The Accelerated Development Plan has rescheduled approximately US$ 140.6 million of capital expenditures related to modules 1 and 2 of Phase 5 to beyond the Accelerated Development Plan. It is expected that the Accelerated Development Plan will be substantially funded by existing cash balances and cash generated by operations.
Following the completion of its USD 250 million rights offering on July 7, 2009, the signing of its amended joint venture agreement on July 25, 2009, the successful cost cutting initiatives that have been implemented since the beginning of 2009 and the recovery of copper and cobalt prices, the Company has reviewed the timing of Phases 3 and 4 of its project development program as outlined in the Technical Report and filed on SEDAR at www.sedar.com.
Below are the results of this review:
- Phases 3 and 4 as described in the Technical Report have now been combined into one new Phase 3 which will take installed copper and cobalt capacity up to 150,000 and 8,000 tons per annum respectively through the refurbishment of existing facilities and infrastructure at the Kamoto Concentrator and the Luilu Refinery by the end of Q2 2011. This compares with an original completion date of Q1 2013 from the Technical Report.
- The Accelerated Development Plan for new Phase 3 is scheduled to ramp-up installed copper capacity from the current 70,000 tons per annum by 20,000 tons per annum increments every 6 months with the first increment being completed during Q1 2010.
- Certain unit operating costs have been updated to reflect actual and forecast levels. Assuming current operating cost assumptions, average cash costs over the period until 2013 for the Accelerated Development Plan is expected to be US$ 0.86/lb after cobalt by-product credit (US$ 14/lb cobalt price) compared to US$ 0.87/lb after cobalt by-product (US$ 15/lb cobalt price) in the Technical Report.
- Based on current copper and cobalt spot prices and current operating cost assumptions in the Accelerated Development Plan, it is expected that capital expenditures relating to the Accelerated Development Plan will be substantially funded by existing cash balances and cash generated from operations.
- The KOV mine plan has been optimized to reduce pre-strip capital, reduce the strip ratio over the first six years of operation and balance ore production from the KOV open-pit and Kamoto underground mines with the process plant requirements for the Accelerated Development Plan. This mine plan will also allow for further delineation and potential up-grade in classification of resources through additional drilling.
- The 2 modules of Phase 5 described in the Technical Report will in future be represented as Phases 4 and 5, with Phase 4 ramping up to 230,000 tons of installed copper capacity per annum and Phase 5 ramping up to 310,000 tons of installed copper capacity per annum, through the construction of new facilities.
- In this regard, the Company will also progress with a Scoping and Engineering study that will re-visit the process engineering completed for the Technical Report with a view towards reducing capital expenditures and simplifying process design to ease the integration of existing process systems and infrastructure into the development required for new Phases 4 and 5.
- The Scoping and Engineering Study will confirm the phasing of capital expenditures related to the new Phases 4 and 5 after the completion of the Accelerated Development Plan. However, for the Accelerated Development Plan, the Company has deferred capital expenditures relating to the hydro- dam power projects (US$ 50 million) and the Far West tailings infrastructure (US$ 88 million) which would only be required for the new Phases 4 and 5. The Company is also assessing the potential to mine the Kamoto East ore body from underground and has therefore removed the capital expenditure allocated to the relocation of the Musonoi village, which amounted to US$ 58 million during the period of the Accelerated Development Plan in the Technical Report.
