TSX-listed copper- and cobalt-miner Katanga Mining has lowered its production guidance for both metals for the second half of 2008, as it struggles to improve mining productivity at its Democratic Republic of Congo operations and scrambles to add residue-filtration capacity at its Luilu metallurgical plant.
The company, which is consolidating, rehabilitating and expanding the neighbouring Kamoto and KOV operations after merging with rival Nikanor earlier this year, had expected to produce 33 500 t of copper and 2 900 t of cobalt in 2008.
Although its second-quarter numbers were in line with forecasts, the miner is tackling number of teething problems, and needs to see a “dramatic” improvement in productivity at its mines, and the Kamoto underground operation in particular, CEO Arthur Ditto said on Tuesday.
As a result, he felt it was “prudent” to lower expectations for the full year, to 27 500 t of payable copper and 2 700 t cobalt.
Production would also be affected by the time that it will take to add residue-filtration capacity to the Luilu plant, where it had underestimated some start-up requirements.
Katanga started producing cobalt at the Luilu metallurgical plant in May this year, and began the first shipments in June.
“With Luilu output continuing to ramp higher, the miners will need to take their performance up a few notches,” Ditto commented.
The company has reduced its second-half guidance for ore production at the Kamoto underground mine to 420 000 t, from 510 000 t, to reflect slower-than-expected improvement in miner productivity.
Katanga has mandated a group of four banks to underwrite a $550-million finance facility, reported CFO Steve Jones.
The company expects the financing to close later this year and will then start drawing funds in the first quarter of 2009.
Katanga, which is targeting output of 300 000 t of copper and 30 000 t of cobalt by 2011, aims to be the world's largest cobalt producer, and Africa's largest copper producer.
The company plans to publish the results of a feasibility study on expanding its combined operations, post the Nikanor merger, in late September, Ditto said.
The study will “redefine” the group's production profile, and will also include revised capital cost estimates, is not expected to contain any surprises or major changes from a scoping study completed last year, said technical services VP Rick Dye.
"Everything is pretty much tracking" the initial study, he commented.