MTX
MEMTX
MTX - Metorex - Metorex Press Release, Changes To The Board And Continuation Of
Cautionary Announcement
METOREX LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1934/005478/06)
JSE code: MTX
ISIN: ZAE000022745
Issuer code: MEMTX
("Metorex" or "the Group" or "the Company")
METOREX PRESS RELEASE, CHANGES TO THE BOARD AND CONTINUATION OF CAUTIONARY
ANNOUNCEMENT
Further to the circular to Metorex shareholders issued on 1 December 2008, the
board of directors of Metorex ("the Board") announces the creation of a board
oversight committee, the full details of which are provided below:
1. Board oversight committee ("the Committee")
The Committee, constituted entirely of non-executive directors, has been
mandated to monitor and review the key performance indicators of the Company
with particular emphasis upon:
- the completion of the Ruashi Copper Project ("Ruashi");
- the achievement of targeted ramp up production objectives to commissioning
at Ruashi;
- prospective future changes to the current structure and composition of the
Board;
- the introduction of certain key new executives to assist with the
management of the Company;
- the reduction of the Group`s borrowings and the repayment of the new
Standard Bank Term Loan Facility by disposing of non-core and cash
consuming assets in the short to medium term;
- addressing the future of the Group`s investment in Copper Resource
Corporation ("CRC");
- monitoring the hedge position at Ruashi; and
- securing longer term and appropriately structured financing for the
improvement of the Group`s project pipeline.
The Committee will meet monthly, or more often as required, until such time as
it is satisfied that the objectives of the Committee have been achieved and
optimal ongoing management and review structures are in place.
The Committee includes Mr R.G. Still (Deputy Chairman of Metorex) who is to
assume a limited executive role at Metorex to assist existing management in
achieving these objectives. His position on the Committee will be reviewed on 30
June 2009.
2. Immediate activities of the Committee
2.1 The Board
The Company intends to restructure the Board, subject to ratification by Metorex
shareholders, to comprise a maximum of three executive directors and a majority
of non-executive directors. Pursuant to this objective the following changes and
intended changes to the board are announced.
2.1.1 Mr A.S. Malone, the current Chairman of the Board, will tender his
resignation from the Board subsequent to the Annual General Meeting on
20 January 2009. A new non-executive Chairman will be proposed by the
Board as a replacement to Mr Malone. The Board would like to express
its profound gratitude and appreciation to Mr Malone for his past
services to Metorex.
2.1.2 Messrs K.C. Spencer and E. Legg, currently executive directors, will
resign as directors of the Company but will continue assisting Metorex
as technical advisers to the Group and as alternate directors to new
independent appointments to the Board.
2.1.3 Mr Maritz Smith, currently an alternate director, will be appointed as
Group Financial Director with immediate effect.
2.1.4 Mr G.A. Forrest (Snr) has resigned as a non-executive director of
Metorex with immediate effect. Mr Forrest has provided the Company
with valuable advice but due to his other business interests and time
demands, Mr Forrest has nominated an alternative representative to
take his place and shareholders are advised that Metorex welcomes the
appointment of Mr Pierre Chevalier to the Board. Mr Chevalier is a
Belgium national with extensive experience of conducting business in
the Democratic Republic of the Congo ("DRC").
2.1.5 Mr Les Paton has accepted an invitation to join the board as an
independent non-executive director. Mr Paton, 56, is a technical
director of Impala Platinum Limited ("Impala") and has 34 years of
mining experience with Impala and the Gencor Group.
The Board welcomes Messrs Paton, Smith and Chevalier to the Board and expresses
its gratitude towards Messrs Spencer, Legg and Forrest for their respective
contributions to the Company.
2.2 Executive management
2.2.1 It is recognised that Metorex has become a company with significant
multi-commodity operations in diverse operating environments.
Accordingly, the Company has commenced with the selection process for
a new Chief Executive Officer. Alternatively a Chief Operating Officer
with the potential to be fast-tracked into the position of Chief
Executive Officer will be appointed. The successful candidate will
need to have the technical and management skills necessary to
consolidate and optimise existing operations, bring to fruition
Metorex`s current project pipeline and develop an effective forward
looking strategy for the Group as a whole.
2.2.2 Mr Charles Needham will continue as Chief Executive Officer until this
position has been filled, after which he will continue with Metorex as
Group Managing Director, thereby ensuring continuity of management and
the Group`s objectives. His responsibilities will include corporate
affairs, Government relationships, corporate governance and human
resources thereby allowing the new Chief Executive Officer to focus on
core operations, new project development and investor relations. Mr
Needham fully supports this initiative.
2.2.3 The Company will also enhance its competence in the technical, project
management and corporate finance areas through future executive
appointments.
2.3 Ruashi
The Company is focused on the completion, final commissioning of plant and the
achievement of targeted production volumes at Ruashi within the timeframes
detailed below.
2.3.1 The following is the commissioning schedule and timetable for
completion:
- Cobalt plant completion by end February 2009;
- Secondary Mills commissioning by end February 2009;
- Permanent Primary Crusher by 25 April 2009; and
- Acid Plant deferred to the last quarter of 2009.
2.3.2 The production build up is as follows:
The Phase II plant produced 550 tonnes of copper cathode during November
2008 and is projected to increase the monthly production levels to
approximately 80% of design capacity by June 2009 and to full design
capacity by December 2009.
The Cobalt plant commissioning has commenced and the first sales of cobalt
carbonate are expected to take place in February 2009. The plant will lock
up approximately 200 tonnes of cobalt in the circuit between the start of
commissioning and commencement of sales. Cobalt production is expected to
reach approximately 70% of design capacity by June 2009 and full design
capacity by December 2009.
The management team at Ruashi has been strengthened with the appointment of
Mr Lee John as General Manager. This appointment is for an initial period
of six months to manage and oversee the commissioning of the Phase II
project. Mr John has broad experience in the development and operation of
hydro metallurgical plants both internationally and in the sub-Saharan
region. In addition to the introduction of Mr John, the Metorex
metallurgical and geological consultants are allocating 50% of their time
to Ruashi with site visits on an alternate week basis. Intra-group senior
management from Sable Zinc are allocating a proportion of their management
time by regular visits and on-site management meetings.
2.3.3 In order to increase transparency, accountability and to emphasise its
focus on core operations, the Company will announce production results
on a quarterly basis.
2.4 Copper hedging
The future copper production of Ruashi was hedged in order to secure project
finance facilities.
Subsequently, Ruashi, in agreement with its bankers, closed certain of the
original hedges that were not supported by physical deliveries, which generated
a profit of approximately US$23million. These proceeds have been applied, as a
condition to the extension of Metorex`s project finance facilities, to a hedge
structure going forward. The resultant summary of the overall hedge position is:
- forward sales of 8 025 copper tonnes at $7071/t for the period November
2008 to June 2009;
- forward sales of 26 800 copper tonnes at $3900/t for the period July 2009
to September 2010; and
- put options for 34 425 copper tonnes at a strike price of $3900/t copper
for the period October 2010 to June 2012.
2.5 The DRC licence review process
The Company has engaged extensively with authorities in the DRC as part of the
mineral title review process which is being undertaken in that country. The
current status of these discussions is that settlements acceptable to the
Company appear to have been agreed.
Until such time as these agreements have been formally signed and completed, a
process currently being delayed by the need for DRC Government ratification and
the possible need to complete and announce the results of all major reviews
simultaneously, the Company is unable to announce the details of these
settlements.
2.6 CRC
The Company owns 50.3% of CRC and a further 5% of the operating company ("MMK")
which gives it an effective 43% shareholding in MMK. The major asset held by CRC
is the Kinsenda mine. This mine has one of the world`s highest grade copper
resources with some 17 million tonnes grading over 5% copper.
During 2008 an AIM listed company, Central African Mining & Exploration Plc
("Camec"), acquired 47% of the issued shares of CRC, with a highest price paid
of GBP2 per share. In terms of CRC`s articles, Camec was obliged to make a cash
offer to all CRC shareholders at this price. No such cash offer has been
forthcoming from Camec.
Metorex currently lacks the financial resources to fast-track the development of
the Kinsenda mine. Irrespective of its current financial capacity it is
considered to be inappropriate for Metorex to continue providing 100% of the
funding required for the continued development of the mine.
The following action plan is being implemented with regard to CRC:
- operating costs of Kinsenda are being reduced and development work slowed
down;
- the Musoshi mine, currently on care and maintenance, will, subject to
agreement, be returned to Sodimico as part of the mineral title review
process settlement;
- the board of CRC, on 10 December 2008, announced that in accordance with
its articles, the Camec shares in CRC will henceforth carry neither voting
rights nor rights to future dividends;
- Metorex will also exercise its rights in terms of its funding agreement
with CRC to capitalise part of its loans in CRC, thereby further increasing
its shareholding in CRC;
- the process of securing shareholder approval for the de-listing of CRC
from AIM has commenced; and
- Metorex has commenced discussions to secure long term and project-
specific finance to develop the Kinsenda mine.
3. Other group operations
3.1 Consolidated Murchison
Given the decline in antimony prices and demand for antimony the future
prognosis for the company is being reviewed with regard to the viability of
this mining operation and a decision to either close, put operations on
care and maintenance or continue with curtailed operations will be taken
and announced as soon as possible.
3.2 Vergenoeg Mining
This operation continues to operate well in line with expectations. The
mine`s development plans are progressing and it remains cash generative.
3.3 Barberton Mines
The mine`s production continues in line with expectations and its financial
performance benefits from the current price of gold.
3.4 Chibuluma Mines
Chibuluma continues to operate at design capacity and its grades continue
to improve as anticipated. The decline in copper prices has impacted on
profit levels but the mine remains profitable and cash positive at current
copper prices. Whenever possible, the company seeks to ensure certainty of
the cashflows to meet both the capital expenditure and debt servicing
requirements through a hedging policy.
4. Continuation of cautionary announcement
Shareholders are referred to the further cautionary announcement dated 27
November 2008 and are advised that Metorex remains involved in negotiations
which may have an effect on the price of the Company`s securities. Accordingly,
shareholders are advised to continue to exercise caution when dealing in the
Company`s shares until a further announcement is made.
By Order of the Board
12 December 2009
Sponsor: Barnard Jacobs Mellet Corporate Finance (Pty) Limited
For enquiries please contact:
Mr Charles Needham
Date: 12/12/2008 09:44:44 Produced by the JSE SENS Department.
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