Katanga Reports Lower Copper and Higher Cobalt Output for Q3

Katanga Mining Ltd. (TSX:KAT) released its financial results for the third quarter of 2015, commenting that it recorded a net loss of $188,193,00, up from a net profit of $38,642,000 in the year-ago period.
Profitability was affected by the following factors:

• The suspension of production, due to which a one-off $24.0 million restructuring expense consisting of employee redundancy and supplier contract settlement costs was booked;
• Movements in the copper and cobalt market price, resulting in a negative sales price variances of $47.1 million when compared to Q2 2015 and $98.2 million when compared to Q3 2014;
• A $25.7 million write-down of inventory to net realizable value driven by the copper price decline ($9.6 million lower than Q2 2015 and $25.7 million higher than Q3 2014);
• Costs being higher due to increased processing costs at KTC and Luilu which were driven by higher consumption of reagents and increased depreciation as a result of the enlarged asset base;
• 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 $72.4 million for Q3 2015 (Q2 2015 – $70.5 million; Q3 2014 – nil); and
• Income tax expense of $0.2 million in Q3 2015 (Q2 2015 – $53.9 million recovery; Q3 2014 – $26.7 million recovery) due to the cessation of deferred tax recognition on tax losses carried forward in the DRC and incurred after Q2 2015.

Production highlights are as follows:

• Due to plant shutdown, ore milled at KTC during Q3 2015 decreased by 5% when compared to Q3 2014 and by 28% when compared to Q2 2015.
• Finished copper metal and concentrate produced of 36,444 tonnes represented a decrease of 14% over Q3 2014 and of 9% over Q2 2015. This was driven by the lower grades and volume of concentrate feed to Luilu.
• Cobalt metal produced totalled a record 1,105 tonnes for Q3 2015, a 23% increase from Q3 2014 and a 17% increase from Q2 2015, due to the increased grades fed together with improved recoveries thereon.
• In Q3 2015, the Company commissioned the following assets at KTC and Luilu in order to improve throughputs and recoveries:
  • Upgrade of Wemco cells and reagent addition system (Tank Cells) at KTC to improve oxide concentrate recoveries and grades; and
  • Upgrade of Spray Bars (Tank Cells) at KTC to improve recoveries by breaking the froth and increasing the velocity of concentrate throughput to transfer tank.
• The assets listed above will directly benefit the WOL process when it is commissioned in H1 2017.

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