TIDMWTI
RNS Number : 8140E
Weatherly International PLC
15 April 2014
Weatherly International Plc
("Weatherly" or "the Company")
Quarterly Operations and Production Update
Weatherly International Plc (AIM: WTI) is pleased to announce
its update for the third quarter of the financial year ending 30
June 2014.
Highlights
-- All major supply contracts for Tschudi finalised resulting in
better than forecast delivery dates and confirming the financial
robustness of the project.
-- Earthworks have commenced, and the build up of the construction camp is 95% complete.
-- The Company has revised its mining plan at Tschudi and infill
drilling is set to start at the end of April.
-- Tschudi contract to purchase acid from Dundee Precious Metals executed.
-- Major initiative underway to improve productivity and reduce
operating costs at Central Operations.
-- Third quarter production of 61,309t of ore producing 4,424t
of concentrate, containing 1,067t of copper.
-- Hedge book closed out during the quarter.
-- Working capital loan with Orion Mine Finance reduced to US$1.93 million.
Tschudi Project
The bankable feasibility study (BFS) for the Tschudi project was
completed in December 2012 and the financial results were announced
together with the funding from Orion Mine Finance (then Red Kite).
At the time, the BFS resulted in an NPV (@8%) of US$105m based on
an average Life of Mine (LOM) copper price of US$6,067/t
copper.
Since then considerable progress has been made in concluding all
the main operating contracts for the project, specifically,
Executed Contract
Qtr 3, 2013 Basil Read (Mining)
B&E Int. (Crushing)
Qtr4, 2013 Nampower (Power)
Qtr1, 2014 Dundee (Acid Supply)
The Company is currently preparing to update the market with
respect to the project's financial status compared with the results
of the Bankable Feasibility Study (BFS) released in December 2012
which it anticipates will be available during the second quarter of
2014. In the meantime, the Company is pleased to report that the
main cost inputs (mining & crushing rates, power and acid) are,
on the basis of the agreed contracts, approximately 10% below those
assumed in the BFS (in US$ terms). Further cost information will be
provided in due course.
CEO, Rod Webster, commented "It is good to see that, a year on,
there has actually been a reduction in the main Tschudi cost inputs
and, with current copper prices still above the LOM average price
used in the BFS, there should be no overall erosion in project
value"
Central Operations
During the quarter, the main underground mining contractor
terminated its contract with the Company. Combined with the fall in
copper price to US$6,400 per tonne, this decision further
accelerated the Company's productivity improvement plans by
bringing the underground mining functions in-house immediately.
This change to owner mining is part of an ongoing program to
overhaul the mines which has been underway since last year. The
initial response to the reduction in the underground labour force
has been positive both in terms of copper production and employee
motivation. We anticipate an immediate cost reduction of 10% as a
result of the measures implemented so date.
The changeover from pillar recovery to primary mining at
Otjihase is underway, with retreat mining of the remaining easily
accessible pillars in the Karuma block, and the accessing of the
Hoffnung Fault West primary mining areas. Finally, the Company
plans to invest in additional underground mining equipment in the
short term, with the objective of improving production levels from
those achieved over the past few quarters.
We believe that the combination of these improvements will
enable the Central Operations to finally achieve their production
target of approximately 7,000 tonnes per year of copper at a
considerably lower operating cost.
Production
Production results for the third quarter 2014 financial year are
set out in the table below:
Quarter Quarter Quarter Quarter
ended ended ended ended
Jun-13 Sept-13 Dec-13 March-14
Ore Treated
(t) 64,872 75,060 75,281 61,309
Grade (%) 2.05 1.72 1.87 1.86
Recovery (%) 93,49 93,02 93,10 93,36
Copper concentrate
(t) 5,250 5,118 5,330 4,424
Copper contained
(t) 1,242 1,201 1,311 1,067
Unit cash cost (C1) for the quarter was, US$7,576/t
(US$3.42/lb), higher than the previous quarter due to the
disruption caused by the changeover from contract to owner mining
and poor equipment availability.
Commercial
During the quarter, the Company delivered 1,274 tonnes of copper
contained in 6,007 tonnes of concentrate to metal trader Louis
Dreyfus at a weighted average price of US$7,360/t copper
(US$3.34/lb).
As at 31 March 2014, the Company had,
- Available cash (excludes Tschudi drawdown) of US$4.3million at 31 March
- Drawn down US$34.7million of its US$80 million loan facility with Orion Mine Finance
- Orion working capital loan reduced from US$2.48 million to US$1.93 million
- Closed out the hedge book and used the proceeds to improve its
working capital position. The Company does not envisage
re-establishing its hedge book at current copper prices and
exchange rates, but will review the situation on a regular
basis.
Conference call
The Company will hold a conference call on Wednesday 16 April at
15.00 UK time. If you would like to attend please send an email to
info@weatherlyplc.com and we will send you the dial in telephone
number.
About Weatherly
Weatherly is an AIM listed, copper mining company, its principal
assets are located in Namibia. It currently has two underground
copper mines (Otjihase and Matchless), and is developing the much
larger Tschudi open cut mine in the north of the country. 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 production. The Company also has
a 25% stake in AIM listed company, China Africa Resources Plc
(CAR), which is currently developing a 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
Rolf Gerritsen, Senior Executive
RFC Ambrian Limited +44 (0) 20 3440 6800
(Nominated Adviser & Broker)
Samantha Harrison
Craig Francis
Shore Capital +44 (0) 20 7408 4090
(Joint Broker)
Jerry Keen
Toby Gibbs
This information is provided by RNS
The company news service from the London Stock Exchange
END
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