Katanga Mining (TSX:KAT) has announced its financial results for the first quarter of 2016.
As quoted in the press release:
Profitability during Q1 2016, when compared to Q4 2015 and Q1 2015, was affected by:
Quality discounts of $25.4 million on finalisation of outstanding 2015 sales resulting in negative sales amounts;
Reduced operating expenditures due to the suspension of copper and cobalt processing;
Restructuring costs totalling $3.1 million relating to contractor demobilisations (Q4 2015 – $12.3 million);
The cessation of borrowing cost capitalisation during Q1 2015 due to the completion of the Phase 5 Expansion Project, resulting in Amended Loan Facility interest expense of $74.2 million for Q1 2016 (Q4 2015 – $73.2million, Q1 2015 – $23.6 million); and
Income tax expense of $0.1 million in Q1 2016 (Q4 2015 – $0.1 million recovery; Q1 2015 – $57.4 million recovery) due to the cessation of deferred tax recognition on tax losses carried forward in the DRC and incurred after Q2 2015. Such recognition will be reassessed on commissioning of the WOL Project.
Cash flows from operating activities decreased in Q1 2016, when compared to Q1 2015, due to the suspension of copper and cobalt processing at the end of Q3 2015 and increased working capital requirements, notably for the reduction of accounts payable following the suspension of copper and cobalt processing. These cash outflows were funded by Glencore.
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