MTX
MEMTX
MTX - Metorex - Metorex Announces The Outcome Of The Democratic Republic Of The
Congo ("DRC") License Review Process Relating To Its Congolese Subsidiary
Companies
METOREX LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1934/005478/06)
JSE code: MTX
ISIN: ZAE000022745
Issuer code: MEMTX
("Metorex")
Metorex announces the outcome of the Democratic Republic of the Congo ("DRC")
License Review process relating to its Congolese subsidiary companies
1. INTRODUCTION
Metorex, the diversified mining group listed on the JSE Limited, is pleased
to inform its shareholders that it has concluded negotiations with the DRC
authorities with respect to the title review process of its subsidiary
companies.
The companies have concluded final agreements with La Generale des
Carrieres et des Mines ("Gecamines") and Societe des Developmente
Industrial et Miniere du Congo ("Sodimico"), and have obtained final
approval from the Government of the DRC with respect to the reviews of
Ruashi Mining Sprl ("Ruashi Mining") as well as Miniere de Musoshi et
Kinsenda ("MMK").
2. RUASHI MINING
The final agreement relating to Ruashi Mining entails the following:
- payment to Gecamines of a mineral content fee of $4m, to be settled in
several tranches over the next three years;
- adjustment of the equity participation of Gecamines and Ruashi
Holdings (Proprietary) Limited ("Ruashi Holdings") to 25%-75%
respectively in Ruashi Mining; and
- standardization of royalties on gross revenue at 2.5%.
The salient commercial components resulting from the review process for Ruashi
Mining are set out below:
Commercial Original Agreement Revised Agreement
Aspect
Shareholding Shareholding in Ruashi Shareholdings allocated as
Mining was allocated to Ruashi Holdings - 75%,
as to Ruashi Holdings Gecamines - 25%.
- 80%, Gecamines -
20%.
Mineral A mineral content fee A final adjustment of the
Content Fee payment of US$3million mineral content fee payment
was paid to Gecamines of US$4 million is to be
on the acquisition of made to Gecamines of which
the prospecting and US$2 million is to be paid
future mining rights on signature of the
to Sokoroshe I, amendment to the Creation
Sokoroshe II and the of Ruashi Mining, a further
Musonoi Project US$1 million 12 months
deposits. later and a final payment
of US$1 million 12 months
thereafter.
Royalty A royalty payable by A royalty of 2.5% on gross
Ruashi Mining to revenue payable by Ruashi
Gecamines calculated Mining to Gecamines on ore
on gross revenue treated from both the
derived from the stockpiles and open pits.
processing of
stockpiles was
calculated at 2.5% and
ore processed from the
open pit orebodies at
a rate of 0.5%.
Various other non-commercial aspects relating to management, boards, continued
social programmes and labour complements were included in the review, which
remain largely unchanged from the previous arrangements.
3. MUSONOI PROJECT (Part of the Ruashi Mining Concession)
An extensive drilling programme has been undertaken at the Musonoi Project
situated in Kolwezi with encouraging copper and cobalt mineralization
having been established. Evaluation work is being completed from an ore
resource establishment, geo-technical evaluation, potential mining method
and mine design and metallurgical testwork perspective. It is envisaged
that a pre-feasibility will be completed during the forthcoming 12 month
period. This project forms an integral part of the Ruashi Mining review
process.
4. COPPER RESOURCES CORPORATION ("CRC") AND "MMK"
The agreement between Sodimico, CRC and Metorex, was approved by the DRC
Government. This agreement confirms the following:
- the revised shareholding of 23% non- dilutable for Sodimico (up from
20%) and 77% for CRC and Metorex (down from 80%). CRC was the only
company categorised in the "orange" category of the review process
that was modified from a 50-50 basic shareholding for the parastatal
enterprises and the joint venture partner respectively to the current
final shareholding of 23-77% respectively;
- mineral content fee payments to Sodimico to the amount of $3 million
over several instalments spread over a 3 year period until 2011; and
- royalties payable by MMK to Sodimico to be standardized at 2.5% of
gross revenue.
It was also agreed that the Musoshi Mine surface and underground
infrastructure be returned by MMK to Sodomico together with certain
equipment that had been transferred to Kinsenda Mine and remained unused.
Compensation would be paid by MMK on a fair value basis for any equipment
removed from Musoshi Mine to Kinsenda Mine that had been applied to the
Kinsenda mining operations.
The power supply to the Musoshi and Kinsenda Mines are channelled through
the Kasumbalesa Substation. This substation will require upgrading on the
development of the Kinsenda Mine for which MMK has undertaken to finance
the upgrade and recover the cost thereof from Sodimico. This upgrade will
only occur once the full scale development of the Kinsenda Mine has
commenced.
CRC is focused primarily on establishing a financing package for the
development of the Kinsenda Mining Project, which has an established
measured resource at grades of approximately 5% Copper. The life of mine
is approximately 15 years at a milling rate of approximately 80 000 tons
per month.
In addition, approximately 13 000 metres of exploratory drilling was
conducted in the Lubembe deposit during 2008. The results of this drilling
are being evaluated and a scoping study and/or pre-feasibility study will
be conducted during the next 12 months.
The Kinsenda Mine has been dewatered to approximately Level 290 which is
below the initially planned production levels. Dewatering and general care
and maintenance will continue pending secured adequate financing for the
development of the project. The metallurgical plant design has been
completed by MDM and certain site establishment and civil work has been
completed. Once the financing of up to US$200million has been secured, the
project will be accelerated and could commence production of copper
concentrate within a period of 18 months thereafter.
5. PROJECT DEVELOPMENT FOCUS AND PRIORITIES
The Metorex Group is primarily focused on the ramp up of production at
Ruashi Mining during this calendar year and the fine tuning and balancing
of the metallurgical plant and open pit mining operations. In addition, a
financing package is being sought for the development of the Kinsenda Mine
which has the infrastructure, power, water, roads and underground
development is existence. A copper concentrator construction is required to
bring this operation into production. The pre-feasibility study on the
Musonoi Project will take place during the next 12 months. Development of
the Musonoi Project would occur subsequent to the commissioning of the
Kinsenda Mine and the securing of suitable financing.
Charles Needham, Group Managing Director of Metorex said, "Metorex is
satisfied with the outcome of this protracted negotiation process. We are
one of the early companies out of sixty one under review to conclude
negotiations and one of the few producing copper in the DRC at this time.
We now look forward with certainty to the future for the Ruashi Mining
project which boasts a state of the art processing facility. The continued
production ramp up at the plant will realise value for shareholders. We are
also seeking a suitable financing package for the continued development at
Kinsenda Mine. Ruashi Holdings, CRC and Metorex have given up some equity
participation in the subsidiaries, however shareholder development loan
repayments have agreed preferential repayment terms."
For further enquiries please contact:
Metorex
Charles Needham Tel: 011-880 3155
College Hill Tel: 011-447 3030
Jacques de Bie Cell: 082-691 5384
Hayley Crane
Sponsor:
BJM Corporate Finance (Pty) Limited
Notes to Editors:
- The mineral content fee is a once off payment and a `doorway` to
operate in the DRC. In the case of Ruashi Mining sprl. The payment
terms are structured with an initial payment of $2m; $1m at the end of
2010 and a final payment of $1m in 2011. This is in addition to the
initial mineral content fee paid prior to this review process ($3m)
which includes the Ruashi, Sokoroshe and Musonoi Project deposits.
- The 0.5% royalty which Ruashi Mining sprl was paying under the old
agreement on ore processed from the open pit has been standardised for
both the stockpiles and open pits.
- MMK and Ruashi are located in the south eastern part of the Katanga
Province, where the infrastructure, terrain and climatic conditions
are user friendly and conducive to relatively trouble free mining
conditions.
Date: 06/02/2009 11:30:03 Produced by the JSE SENS Department.
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