TORONTO (miningweekly.com) – TSX-listed Katanga Mining will accelerate the ramp up of its copper/cobalt complex in the Democratic Republic of Congo (DRC), the firm announced on Tuesday.
Katanga shares soared 40% on Tuesday, to C$0,77 apiece by 15:59 in Toronto.
The ramp up, to 150 000 t/y of copper and 8 000 t/y of cobalt, will now be completed by mid-2011, compared with an earlier completion date of the first quarter of 2013.
Katanga said it has revised its project development plan, to combine Phases Three and Four into one new 'Phase Three', which will increase production through the refurbishment of existing facilities and infrastructure at the Kamoto Concentrator and the Luilu refinery by the end of the second quarter of 2011.
The accelerated development plan is expected to be the "substantially" funded by existing cash balances and cash generated by operations, the firm said.
After a shaky start to 2009, Katanga is now well funded, after closing a $250-million rights offering in July, and last month signing an amended joint venture agreement with DRC State miner Gécamines, bringing the company's government contract review process to an end.
The firm said in August that the Phase Two refurbishment of its existing facilities, to a production capacity of 70 000 t/y of copper and 4 000 t/y of cobalt, would be completed under budget in the third quarter.
It has successfully reduced costs at its operations, and the recovery of copper and cobalt prices also played a role in the decision to review the Phase Three and Four schedule, Katanga said.
The firm will ramp up installed copper capacity from the current 70 000 t/y by 20 000 t/y increments every six months, starting with the first output increase in the first quarter of 2010.
The KOV mine plan has been optimised to reduce prestrip capital, reduce the strip ratio over the first six years of operation and balance ore production from the KOV openpit and Kamoto underground mines with the process plant requirements for the accelerated development plan.
Going forward, the previous Phase Five modules will be referred to as Phases Four and Five, with Phase 4 ramping up to 230 000 t/y of installed copper capacity and Phase 5 ramping up to 310 000 t/y of installed copper capacity, through the construction of new facilities.
The new schedule includes a plan to defer some capital spending that was planned for the 'old' Phases Three and Four, including $50-million for hydro power projects and $88-million for some tailings infrastructure, which will only be required for the new Phases Four and Five.
The company is also assessing the potential to mine the Kamoto East orebody from underground, and has therefore removed the capital expenditure allocated to the relocation of the Musonoi village, which would have amounted to $58-million during the period to 2013.
Katanga said it plans to complete a scoping and engineering study to relook at the capital expenditures for these phases, as well as the future integration of existing process systems and infrastructure into the development required for new Phases Four and Five.
Project cost estimates have also been updated and the company now expects the average cash cost over the period until 2013 to be $0,86/lb of copper, after cobalt byproduct credits, compared with a previous forecast of $0,87/lb.
Katanga scaled back its operations last year to cushion the effects of low metals prices and shareholder Glencore agreed late in December to underwrite a convertible $100-million loan facility, as well as an amendment to an existing $165,3-million loan.
In April this year, Katanga announced it would receive another $50-million bridging loan from Glencore, to tide it over until the rights offering was completed.
The bridging loan has since been repaid, from the proceeds of the rights offering.
Edited by: Liezel Hill
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