Charlotte Mathews
22 August 2008
Johannesburg — COPPER miner Metorex is examining opportunities to diversify in the longer term from its heavy weighting in copper and the Democratic Republic of Congo towards other base metals, including zinc, and other countries, CEO Charles Needham said yesterday.
In the year to June, more than half of its revenue was from copper and cobalt mining in the Congo and Zambia. This would rise in the next few years with the second phase of development at Ruashi and as copper mines were developed at Kinsenda and Musonoi, all in the Congo.
Early drilling results suggested Musonoi, a greenfields exploration project, could be at least the same size as Kinsenda, Needham said.
Metorex spent R2bn last year on phase two of Ruashi, development at Kinsenda and exploration at gold subsidiary Pan African Resources. In the next four years the group expected to spend $300m-$400m developing Kinsenda and Musonoi. Copper production from all Metorex operations would rise to 125000-140000 tons a year and cobalt output to 6000-8000 tons. Last year Metorex produced 25350 tons of copper and 565 tons of cobalt.
Group mineral sales rose 43% to R2,4bn compared with last year and headline earnings 19% to 131,7c per share on a higher number of shares in issue. No dividend was declared.
The tax rate rose to 32% from 25% partly because Barberton Gold Mines started to pay tax at 35% and partly because of tax payable in Zambia.
Zambia introduced a windfall tax on copper profits in April though Metorex and some other miners had agreements in place capping tax for years. Needham said Zambian copper miners would if necessary go to international arbitration to enforce agreements.
Metorex was negotiating with black empowerment groups at its Vergenoegd fluorspar mine and Consolidated Murchison gold-antimony mine to take equity stakes to fulfil the final conditions for new-order mining licences. Needham said while both empowerment groups had financial resources, the deals were likely to involve vendor financing. Institutions were keen to finance the deals as both mines had robust cash flow.
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