ZUG, Switzerland, Aug. 14, 2017 /CNW/ - Katanga Mining
Limited (TSX: KAT) ("Katanga" or the "Company") today is
providing an update on the previously announced review of certain
of the Company's past accounting by the independent directors of
the Company's Board of Directors, being Robert G. Wardell, Terry
Robinson and Hugh Stoyell
(the "Independent Directors").
As previously announced, the Independent Directors are working
with Management, Katanga's external auditors, Deloitte &
Touche, the Company's outside legal counsel and outside accounting
advisors to review historical accounting relating to the production
of copper cathode, copper concentrates and stockpiled ore. In
particular, the review concerns certain historical entries relating
to the incorrect recording of the total tonnage of finished copper
cathodes produced during the years ended December 31, 2015 and 2014, and certain other
entries which deal with the valuation of copper oxide concentrates
included in work in progress inventories, the valuation of ore in
stockpile inventories and the recorded amounts of property, plant
& equipment.
While the review is still ongoing, based on the results of the
review to date, the Independent Directors have concluded that the
Company's consolidated financial statements for the years ended
December 31, 2016, 2015 and 2014 and
related management's discussion and analysis ("MD&A") and all
interim consolidated financial statements and interim MD&A
since December 31, 2014 should not be
relied upon. Accordingly, the Independent Directors have
recommended to the Board of Directors that the Company's audited
consolidated financial statements for the years ended December 31, 2016 and 2015 and its unaudited
interim consolidated financial statements for the three months
ended March 31, 2017 and 2016, and
all related MD&A should be restated. The Company currently
expects to effect such refilings, in conjunction with its external
auditor, by mid-September, 2017.
Based on the results of the review to date, the Company's
restated consolidated balance sheets as at December 31, 2016 and 2015 are expected to both
reflect a reduction in property, plant and equipment (previously
reported as $2,404 million as at
December 31, 2016) of approximately
$130 million, an increase in
non-current inventories (previously reported as $365 million as at December 31, 2016) of approximately $55 million, with a corresponding reduction in
total equity (previously reported as $528
million as at December 31,
2016) of approximately $75
million less related income taxes of approximately
$19 million.
The Company also expects that total equity as at January 1, 2015 (previously reported as
$1,810 million) will be reduced by
approximately $90 million
($130 million less related income
taxes of $40 million) and the net
loss previously reported for the year ended December 31, 2015 of $630
million will be reduced by approximately $55 million less related income taxes of
approximately $21 million.
To date, no adjustments to the previously reported loss for the
year ended December 31, 2016 have
been identified.
Katanga wishes to emphasize that the review and restatement do
not affect the anticipated timing for the commissioning of its
whole ore leach project, previously disclosed cash and debt
balances, 2017 production guidance or limited ongoing operations
during the suspension of copper and cobalt processing that
commenced in Q3 of 2015. The review is still ongoing, and the
amounts included in this press release are subject to change.
The review and the resulting restatement will cause the
preparation and filing of the Company's unaudited interim
consolidated financial statements for the three and six months
ended June 30, 2017 and 2016 and
accompanying MD&A ("Q2 Filings") to be delayed beyond the
August 14, 2017 deadline under
National Instrument 51-102 – Continuous Disclosure
Requirements.
As previously announced, the Company has informed staff of the
Ontario Securities Commission (the "OSC") about its review and has
applied to the OSC pursuant to Part 4 of National Policy 12-203
("NP 12-203") for a Management Cease Trade Order ("MCTO") pending
the filing of the Q2 Filings and the restatement of the Company's
historical financial statements. If an MCTO is issued, the Company
intends to satisfy the provisions of the "alternative information
guidelines" as set out in NP 12-203, including the requirement to
file bi-weekly status reports in the form of news releases
containing prescribed updating information, until the Q2 Filings
are made. An MCTO would not generally affect the ability of persons
who are not directors, officers or insiders of the Company to trade
in securities of the Company. There can be no assurance that an
MCTO will be issued.
In light of the proposed MCTO and in conjunction with the
preparation of the Q2 Filings, the Company has established a
blackout on trading by directors, officers and certain other
insiders of Katanga, and intends to continue the blackout until the
Q2 Filings and the restated consolidated financial statements have
been filed.
Unless circumstances otherwise require, Katanga will provide
further comment only when the review and restatement is
completed.
About Katanga Mining Limited
Katanga Mining
Limited operates a major mine complex in the Democratic Republic of Congo producing refined
copper and cobalt. The Company has the potential to become
Africa's largest copper producer
and the world's largest cobalt producer. Katanga is listed on the
Toronto Stock Exchange under the symbol KAT.
Forward Looking Statements
This press
release may contain forward-looking statements. Often, but not
always, forward-looking statements can be identified by the use of
words such as "plans", "expects" or "does not expect", "is
expected", "budget", "scheduled", "estimates", "forecasts",
"intends", "anticipates" or "does not anticipate", or "believes",
or describes a "goal", or variation of such words and phrases or
state that certain actions, events or results "may", "could",
"would", "might" or "will" be taken, occur or be achieved.
All forward-looking statements reflect the Company's beliefs
and assumptions based on information available at the time the
statements were made. Actual results or events may differ from
those predicted in these forward-looking statements. All of the
Company's forward-looking statements are qualified by the
assumptions that are stated or inherent in such forward-looking
statements, including the assumptions listed below. Although the
Company believes that these assumptions are reasonable, this list
is not exhaustive of factors that may affect any of the
forward-looking statements. The key assumptions that have been made
in connection with the forward-looking statements include the
following: the Independent Directors' review of certain past
accounting, the outcome, analysis or conclusions of the Independent
Directors' review, the expected delay in filing the Q2 Filings, the
need to restate certain historical financial statements of the
Company, the expected timing of completion of the restatement of
the Company's historical financial statements, the issuance by the
OSC of an MCTO or any other action to be taken by securities
regulatory authorities in light of the review, the operations of
the Company during the production suspension and timeline for the
recommencement of operations remaining consistent with management's
expectations, there being no significant disruptions affecting the
operations of the Company whether due to labour disruptions, supply
disruptions, power disruptions, rollout of new equipment, damage to
equipment or otherwise; permitting, development, operations,
expansion and acquisitions at the Project being consistent with the
Company's current expectations; continued recognition of the
Company's mining concessions and other assets, rights, titles and
interests in the DRC; political and legal developments in the DRC
being consistent with its current expectations; the continued
provision or procurement of additional funding from Glencore for
operations, the completion of the T17 Underground Mine, the WOL
Project and the Power Project (as defined in the Company's Annual
Information Form for the year ended December
31, 2016 dated March 31,
2017); new equipment performs to expectations; the exchange
rate between the US dollar, South African rand, British pounds,
Canadian dollar, Swiss franc, Congolese franc and Euro being
approximately consistent with current levels; certain price
assumptions for copper and cobalt; prices for diesel, natural gas,
fuel oil, electricity and other key supplies being approximately
consistent with current levels; production, operating expenses and
cost of sales forecasts for the Company meeting expectations; the
accuracy of the current ore reserve and mineral resource estimates
of the Company (including but not limited to ore tonnage and ore
grade estimates); and labour and material costs increasing on a
basis consistent with the Company's current expectations.
Forward-looking statements involve known and unknown risks,
future events, conditions, uncertainties and other factors which
may cause the actual results, performance or achievements to be
materially different from any future results, prediction,
projection, forecast, performance or achievements expressed or
implied by the forward-looking statements. Such factors include,
among others, unfavourable conclusions of the Independent
Directors' review, unforeseen action taken by the OSC or
other securities regulatory authorities, the unforeseen delays or
changes to the WOL Project; actual results of current exploration
activities; actual results and interpretation of current
reclamation activities; conclusions of economic evaluations;
changes in project parameters as plans continue to be refined;
future prices of copper and cobalt; possible variations in ore
grade or recovery rates; failure of plant, equipment or processes
to operate as anticipated; accidents, labour disputes and
other risks of the mining industry; delays in obtaining
governmental approvals or financing or in the completion of
exploration, development or construction activities, delays due to
strikes or other work stoppage, both internal and external to the
Company as well as those factors disclosed in the Company's current
annual information form and other publicly filed documents.
Although Katanga has attempted to identify important factors that
could cause actual actions, events or results to differ materially
from those described in forward-looking statements, there may be
other factors that cause actions, events or results not to be as
anticipated, estimated or intended. There can be no assurance that
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements.
The Company disclaims any intention or obligation to update
or revise any forward-looking statements whether as a result of new
information, future events, or otherwise, except in accordance with
applicable securities laws.
SOURCE Katanga Mining Limited