TIDMWTI
RNS Number : 5171C
Weatherly International PLC
17 April 2013
Weatherly International Plc
Quarterly Operations and Production Update
Weatherly International Plc ("Weatherly" or "the Company"
AIM:WTI) is pleased to present its quarterly update for the third
quarter of its 2012/13 fiscal year.
Highlights
-- RK Capital's due diligence at Tschudi has been largely
completed, and the Company has been offered a revised term sheet
which it has accepted in principle. Loan documentation will be
subject to additional review of the Company's operations
-- The Tschudi front end engineering and design work has largely been completed
-- Major contracts with the four main consultants/contractors are being negotiated
-- The Tschudi environmental amendments were filed and are
progressing through the approval process as anticipated
-- A detailed operational review was completed at Central
Operations leading to a restructuring to bring costs into line with
revised production levels
-- Third quarter production from Central Operations was 67,833
tonnes of ore containing 4,948 tonnes of copper concentrate, for
copper production of 1,142 tonnes of copper metal, a decrease in
production over the previous quarter due to a series of one-off
events at the underground operations. Accordingly, Weatherly now
expects 2013 production of around 5,000 tonnes of copper
-- As a result of arbitration proceedings over Tambao being
discontinued, Wadi has paid Weatherly US$2million as full
reimbursement of expenses incurred on Wadi's behalf
-- Cash at the end of the quarter was US$7.2m
Rod Webster CEO of Weatherly commented:
"Weatherly is making significant strides towards becoming a
mid-tier copper producing company by the end of 2014. The Tschudi
Project is progressing and we are currently working with Red Kite
to finalise the outstanding requirements for the loan.
Operationally we have not delivered against our plans at the
Central Operations and during the quarter we completed a detailed
review of both our underground mines. As a result of our review, we
are now implementing a number of changes which will reduce our
costs in line with achievable production and ensure continuing cash
flow".
Tschudi Copper Project
RK Capital's due diligence at Tschudi has been largely
completed, and the Company has been offered a revised term sheet,
for the full funding of Tschudi US$88 million, which it has
accepted in principle. Loan documentation will be subject to
additional review of the Company's operations.
We continue to progress the project and are funding the initial
development through existing cash flow to avoid delays to the
project.
Front end engineering and design is largely complete and the
various tender packages and orders for long lead items are ready to
go as soon as funding has been finalised. Concurrently we have been
advancing contractual arrangements with the four main
consultants/contractors working on the Tschudi project.
The Ministry for Environment and Tourism is reviewing the
environmental amendments submitted last month and an external
consultant has been appointed by the Ministry to accelerate the
process in recognition of the importance of the project to
Namibia.
Central Operations
Opening Old Matchless
During the last quarter of 2012 the Weatherly Board approved a
work programme for the development of the Old Matchless Mine. Work
is proceeding and a new environmental assessment (EA) and
environmental management plan (EMP) have been submitted to the
Ministry of Environment & Tourism for the Matchless licence
area. Dewatering of the mine is on-going and power to the site is
being procured.
Under revised plans the Company intends to use existing crew and
equipment to advance the decline thus not incurring any incremental
costs. Work on the decline will commence as soon as the preparatory
works noted above are completed.
Opening of Old Matchless will result in increased production
from lower cost primary mining.
Production
Production results for the past four quarters are set out in the
table below.
Jun-12 Sep-12 Dec-12 Mar-13
Ore Treated (t) 85,153 87,645 79,330 67,833
Grade (%) 1.66 1.8 1.81 1.81
Recovery (%) 91.52 93.31 92.58 92.92
Copper concentrate (t) 5605 6499 5780 4,948
Copper contained (t) 1292 1470 1328 1,142
During the quarter, a significant ground subsidence occurred in
the upper levels of the Otjihase compartment, unfortunately
resulting in a decision to abandon the area. Inspections and
monitoring permitted the controlled withdrawal of personnel several
days before the event occurred, so avoiding any risk of injury.
With the loss of future production from this area, the Company
has revised the Otjihase mine plan, bypassing the conveyor system
to improve efficiencies and restructured the contractual
arrangements currently in place. Under the new arrangements
Weatherly has agreed to the appointment by the contractor of a new
Otjihase management team with extensive international experience in
successfully turning around safety and production performance to
achieve best practice.
While these changes are bedding down we expect Central
Operations to produce at around the recent rate of 5,000 tonnes of
copper per annum. Further production uplift is expected when a new
compartment (Hoffnung West) becomes available to replace the ore
blocks lost through subsidence, and, in the longer term, from Old
Matchless.
Very regrettably, an employee of our mining contactors at
Matchless was electrocuted while attending a pump. The fatality
caused a temporary shutdown of Matchless, while an independent
audit of all electrical installations was undertaken, and the
incident is currently under investigation by the Chief Inspector of
Mines in Namibia. Meanwhile, the mine is operating normally.
Commercial
During the quarter, the Company delivered 1,226 tonnes of copper
contained in 5,938 tonnes of concentrate to metal trader Louis
Dreyfus at a weighted average price of US$ 7,743 /t (US$3.51 /lb)
copper. The Company continues its policy of forward selling a
proportion of its production up to 18 months ahead.
The cash cost (C1) for the quarter was US$7,344 (US$3.33 /lb)
while the year the date cost was U$6,238 (US$2.83 /lb). The
unusually high cash cost for the quarter was a consequence of the
abandonment of the Otjihase compartment, the restructuring of the
contractual arrangements and the loss of production associated with
the fatality at Matchless. This cost is expected to be reduced once
the operational changes referred to earlier take effect.
As at 31 March 2013, the Company had:
(1) Cash at bank of US$7.2m equivalent
(2) Reduced its working capital loan with Louis Dreyfus to
US$4.1m, having made loan repayments of US$0.3m in the quarter
(3) Forward contracts over 3,100 tonnes copper at an average price of US$7,965/t (US$ 3.61 /lb)
Burkina Faso
Wadi and the Government of Burkina Faso (GBF) have settled their
dispute with respect to the Tambao manganese deposit. Wadi entered
into an agreement with GBF in April 2007. In June 2007, Wadi
engaged Weatherly to complete a feasibility study on the Tambao
Project. Wadi submitted it to Burkina Faso in September 2008.
A dispute arose between Wadi and the GBF regarding the rights
over the deposit, which was submitted in April 2011 for resolution
by a tribunal constituted under the auspices of the International
Court of Arbitration of the International Chamber of Commerce.
This dispute has now been settled and Wadi has agreed to
discontinue the arbitration. As a result Wadi has paid Weatherly
US$2million as full reimbursement of expenses incurred on Wadi's
behalf.
About Weatherly
Weatherly is an AIM listed, copper focused mining company, the
principal assets of which are located in Namibia. It currently has
two producing copper mines (Otjihase and Matchless), and has
recently completed a bankable feasibility study over the Tschudi
Copper Project. These assets will enable Weatherly to achieve its
medium term strategy of establishing a copper mining business
capable of sustaining approximately 25,000tpa of copper at an
average industry cost of production.
The Company also has a 25% stake in an AIM listed company, China
Africa Resources Plc (CAF), which is currently focused on the
development of the lead/zinc project at Berg Aukas in Northern
Namibia.
For further information please contact:
Weatherly International Plc +44 (0) 20 7917 2989
Rod Webster, Chief Executive Officer
Canaccord Genuity Limited +44 (0) 20 7523 8000
Andrew Chubb / Andrei Kroupnik
This information is provided by RNS
The company news service from the London Stock Exchange
END
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