Katanga Mining Reports Q1 2018 Production and Financial Results

Katanga Mining Limited (TSX: KAT) announced its 2018 first quarter production and financial results.

Highlights are as follows:

On September 11, 2015, the company announced the decision to suspend the processing of copper and cobalt during the construction phases of the Whole Ore Leach project. The suspension continued throughout most of 2017 with copper production resuming upon completion of Phase 1 of the WOL Project on December 11, 2017; Phase 2 construction activities of the WOL project are progressing according to the 2018 project execution plan. Hot commissioning of the second train of the WOL project is expected to commence in Q4 2018; The cobalt production section of the plant was commissioned during March 2018 leading to the production of 525 tonnes of cobalt metal contained in hydroxide; and the low-grade solvent extraction train was commissioned and ramped up during Q1 2018, contributing to Q1 2018 production of 27,677 tonnes of copper cathode.

Mining

Waste mined decreased to 9,905,100 tonnes in Q1 2018 from 11,193,159 tonnes in Q4 2017 relating to reduced waste mining activities in 2018 in order to provide sufficient ore availability for the WOL Project;
Ore mined in open pit operations increased to 836,539 tonnes in Q1 2018 from 433,169 tonnes in Q4 2017. Ore mined in combined open pit operations in Q1 2018 had an average copper grade of 3.23 percent, representing contained copper of 27,019 tonnes. Ore mined in the KOV open pit in Q4 2017 had an average copper grade of 2.18 percent, representing contained copper of 9,459 tonnes. No ore was mined at the Mashamba East Open Pit in 2017.
In Q1 2018, the company re-commissioned for use in the KOV Open Pit:
Two CAT 793D trucks for increased hauling capacity; and
One CAT D9R dozer related to the ongoing mining ramp-up.
In Q1 2018, the company commissioned:
Two CAT 745 ADT lube trucks for increased ancillary work; and
One CAT CS74B compactor for road and access maintenance.

Processing

Open pit ore milled and Kamoto Interim Tailings Dam (“KITD”) material processed at the Kamoto Concentrator (“KTC”) during Q1 2018 increased over Q4 2017 as the Luilu Metallurgical Plant (“Luilu”) ramp-up and commissioning progressed;
Finished copper increased to 27,677 tonnes in Q1 2018 from 2,196 tonnes in Q4 2017. Cobalt contained in hydroxide increased to 525 tonnes in Q1 2018 from nil tonnes in Q4 2017. Both increases related to the WOL commissioning and ramp-up plan;
In Q1 2018, the Company re-commissioned the following assets at KTC:
CM5 for milling capacity, which is currently milling at design capacity;
Three flotation trains for additional flotation capacity; and
One CAT D8R dozer for stockpile management.
In Q1 2018, the Company commissioned the following assets at KTC:
Three CAT 745 ADT’s for B3 crusher feed and ore management;
One CAT 992K for IPC crusher feed; and
One CAT 320D excavator for B3 crusher feed and ore management.
In Q1 2018, the Company commissioned the following at Luilu in order to improve throughputs and recoveries:
A low grade solvent extraction circuit; and
A cobalt production plant, consisting of impurity removal and cobalt precipitation sections.

During Q1 2018, the company completed the following on the WOL project, Acid Plant and Cobalt projects (as defined below):

A pre-leach train, expected to result in the more efficient use of sulphuric acid;
The cobalt circuit was commissioned, with the first cobalt hydroxide produced in March 2018;
The construction of Phase 2 of the WOL project started in January 2018. Progress was made on the high-grade clarifier, receiving thickener and the post leach clarifier, which form the basis for copper production. It is expected that Phase 2 construction will be completed by Q4 2018;
Progress according to the project schedule is being made on the cobalt debottlenecking project and cobalt dryers aimed at increasing potential maximum cobalt production capacity to 40,000 tonnes per annum by Q1 2019; and
Design work progressed during Q1 2018 on the Acid Plant. The Acid Plant is a sulphuric acid and sulphur dioxide production plant to be constructed at KCC, which is anticipated to improve the reliability (compared to imports) of the supply of these reagents to the WOL project processing circuit. The Acid Plant is designed to produce 1,900 tonnes per day of sulphuric acid, 200 tonnes per day of sulphur dioxide and net 17MW of co-generated power. Acid production is expected to commence in Q3 2019.

Review of 2018 First Quarter Results

Profitability during Q1 2018, when compared to Q4 2017, was affected by the following:
Total sales increased to US$146.7 million in Q1 2018 from US$7.7 million Q4 2017 relating to a 22,189 tonne increase in copper cathode sold;
Cost of sales increased to US$178.3 million in Q1 2018 from US$4.3 million in Q4 2017 relating to increased sales volumes;
EBITDA increased to a gain of US$16.4 million in Q1 2018 from a loss of US$187.6 million in Q4 2017 related to increased revenue generated in the period and lower cost of sales as described above;
Depreciation increased to US$54.6 million in Q1 2018 from US$31.2 million in Q4 2017 relating to the volume related depreciation impact on assets being amortized on a units of production basis; and
Net loss attributable to shareholders decreased to US$77.9 million in Q1 2018 from US$230.7 million in Q4 2017.
Cash flow from operating activities increased to US$35.4 million in Q1 2018 from cash outflow from operations of US$71.8 million in Q4 2017. The increase in cash generation was driven by the increase in revenue due to production ramp-up.

Click here to read the full Katanga Mining Limited (TSX: KAT) press release.