Annual General Meeting. May 2017

Transcription

1 Annual General Meeting May 2017

2 Cautionary Statement: Forward-looking Statements This presentation may contain forward-looking statements, including, but not limited to, the suspension of copper and cobalt processing, investigations into and remediation efforts related to the March 2016 geotechnical failure at KOV Open Pit, the impact of newly acquired or commissioned equipment on operations, the improvements related to the WOL Project, the impact of the shift in focus towards waste mining during the suspension of production, the expectation of resumption of production and the impact of the timing thereof, initiatives to be undertaken during the suspension of production and the overall expected improvement of recoveries and grades. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. All forward-looking statements reflect the Company s beliefs and assumptions based on information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. All of the Company s forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions listed below. Although the Company believes that these assumptions are reasonable, this list is not exhaustive of factors that may affect any of the forward-looking statements. The key assumptions that have been made in connection with the forward-looking statements include the following: the operations of the Company during the production suspension and timeline for the recommencement of operations remaining consistent with management s expectations, there being no significant disruptions affecting the operations of the Company whether due to labour disruptions, supply disruptions, power disruptions, rollout of new equipment, damage to equipment or otherwise; permitting, development, operations, expansion and acquisitions at the Project being consistent with the Company's current expectations; continued recognition of the Company s mining concessions and other assets, rights, titles and interests in the DRC; political and legal developments in the DRC being consistent with its current expectations; the continued provision or procurement of additional funding from Glencore for operations, the completion of the T17 Underground Mine, the WOL Project and the Power Project; the successful completion of, and realizing the intended benefits from the WOL Project and the Power Project; new equipment performs to expectations; the successful development of the T17 Underground Mine; the exchange rate between the US dollar, South African rand, British pound, Canadian dollar, Swiss franc, Congolese franc and Euro being approximately consistent with current levels; certain price assumptions for copper and cobalt; prices for diesel, natural gas, fuel oil, electricity and other key supplies being approximately consistent with current levels; production and cost of sales forecasts for the Company meeting expectations; the accuracy of the current ore reserve and mineral resource estimates of the Company (including but not limited to ore tonnage and ore grade estimates); and labour and material costs increasing on a basis consistent with the Company's current expectations. Forward-looking statements involve known and unknown risks, future events, conditions, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, prediction, projection, forecast, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among others, the actual results of current exploration activities; actual results and interpretation of current reclamation activities; conclusions of economic evaluations; changes in project parameters as plans continue to be refined; future prices of copper and cobalt; possible variations in ore grade or recovery rates; failure of plant, equipment or processes to operate as anticipated; accidents, labour disputes and other risks of the mining industry; delays in obtaining governmental approvals or financing or in the completion of exploration, development or construction activities, delays due to strikes or other work stoppage, both internal and external to the Company as well as those factors disclosed in the Company's current annual information form and other publicly filed documents. Although Katanga has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. The Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events, or otherwise, except in accordance with applicable securities laws. Tim Henderson, Technical Consultant to the Company, is the Qualified Person, as defined in National Instrument , who approved the scientific and technical disclosure in this presentation. The Company filed its technical report entitled Technical Report on the Material Assets of Katanga Mining Limited, Lualaba Province, Democratic Republic of Congo dated March 31, Capitalized terms used but not otherwise defined herein have the meaning ascribed thereto in the Company s annual information form for the year ended December 31, 2017 dated Marc 31,

3 Agenda Health and Safety Update General Information & Mining and Processing Assets 2016 Operations Overview Production KOV Open Pit Production Mashamba East Open Pit 2016 Financial Overview WOL: Project Summary, Processing, Overview, Site Progress, S-Curve & Statistics Socio-Economic Contributions Social Investments DRC Power Project 3

4 # of Fatalities LTIFR Health & Safety Update 8 Safety Performance - Fatalities and LTIFR 1,000,000 Man Hours FATALITY LTIFR 0 Health and Safety Initiatives for CHMP completed in 2016 Complete next 10 top priority additional Catastrophic Hazard Management Plans Implement comprehensive Permit to Work processes 4

5 Asset Base General Information 75% / 25% joint venture with state-owned Gécamines High grade ore deposits with Mt Measured and Indicated resource at an estimated average grade of 3.66%Cu and 0.55%Co (1) Mine life: 25 years with potential to produce 300k tpa copper and 22k tpa cobalt Processing infrastructure includes: KTC Concentrator Luilu Hydrometallurgical facility WOL construction in process: First train expected to start commissioning in Q Second train expected to start commissioning in H $437 million (1) As of December 31,

6 Asset Base Mining and Processing Assets Approximately 5 km 1 1. Luilu Met. Plant / SX-EW refinery / WOL C 2 3 B 2. Kamoto Concentrator 4 A 3. KOV open pit mine A. Mashamba East (O/P) B. T-17 Musonoi (O/P & U/G) D 20 km 4. Kamoto underground mine C. Kananga (O/P) D. Tilwezembe (O/P) 6

7 2016 Operations Overview The WOL Project: The Pre Leach, Leach and Post Leach circuit civil works was completed and the structural steelwork for 20 of the 28 CCD s and thickeners was erected by year end Cash spend in 2016 was $116 million related to site excavation, civil work and procurement of various long lead time items Ongoing suspension of production: Copper and Cobalt processing suspended during the construction phase of the WOL Project Mining operations continued during 2016 at KOV and Mashamba East Open Pits with a focus on waste mining Waste mined in 2016 was 79% lower than in 2015 due to the suspension of mining and processing 7

8 Tonnes Production KOV Open Pit In 2016, waste mined was 7,486,536 tonnes, a decrease of 78% compared to 2015 due to the revised waste mining plan following the suspension of operations In 2016, the Company commissioned: One Caterpillar 6060 shovel Three Caterpillar 793 haul trucks One Caterpillar fuel truck One Caterpillar service truck 14,000,000 12,000,000 10,000,000 8,000,000 6,000,000 4,000,000 2,000,000 - Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Production waste mined (tonnes) Ore mined (tonnes) 8

9 Tonnes Production Mashamba East Open Pit In 2016, waste mined was 633,725 tonnes, a decrease of 85% compared to 2015 due to the revised waste mining plan following the suspension of operations 2,500,000 2,000,000 1,500,000 1,000, ,000 - Q115 Q215 Q315 Q415 Q116 Q216 Q316 Q416 Production waste mined (tonnes) Ore mined (tonnes) 9

10 2016 Financial Overview Profitability during 2016, when compared to 2015, was affected by: Quality discounts of $27 million on finalization of outstanding 2015 sales Reduced operating expenditures due to the suspension of copper and cobalt processing Release of the restructuring provision of $0.6 million relating to contractor demobilisations and employee redundancy costs following the suspension of production (total in 2015: $36.3 million expense) The cessation of borrowing cost capitalization during Q due to the completion of the Phase 5 Expansion Project, resulting in Amended Loan Facility interest expense of $305.5 million for 2016 ( $239.8 million) and customer prepayment interest of $43.5 million for 2016 ( $19.7 million) Income tax expense of $9 million in 2016 relating to 2014 and 2015 corporate income taxes as well as changes in the deferred tax liability ( $111.3 million recovery). Deferred tax recognition on tax losses carried forward in the DRC ceased in Q Such recognition will be reassessed on commissioning of the WOL Project Net Loss Attributable to Equity Holders of $427.7 million ( $424.1 million loss) Total assets decreased from $5,778.7 million as at December 31, 2015 to $5,766.1 million as at December 31,

11 WOL Project Summary Total project spend - $437 million 300,000 tonnes of Copper Cathode per Annum 22,000 tonnes of Cobalt Hydroxide per Annum Project commissioning Q Completed test work shows: Overall Copper recovery 82 % Sulphide Copper recovery 76 % Oxide Copper recovery 85 % Gangue acid consumption 65 kg/t Plant flexible to sulphide / oxide ratio All existing plant infrastructure used as part of WOL process 11

12 WOL processing flowsheet Current processing flowsheet Processing Flowsheet Oxide Flotation vs WOL KTC plant Stockpile Mixed ore milling Preflotation Oxide flotation Luilu plant Final tailings Oxide concentrate Oxide concentrate circuit requires multiple reagent points Sulphide concentrate SX KTC plant Roasting Leaching EW Cu cathode Stockpile Mixed ore milling Preflotation Luilu plant Oxide ore Oxide material requires only 1 reagent at 1 point - Acid Sulphide concentrate Roasting Leaching SX EW Cu cathode 12

13 WOL Project Project Overview As at December 31, total payments of $116 million Capex Cash flow forecast to the end of 2017 is $284 million Schedule On track for first train commissioning by Q Construction Earthworks and civils on track with SMPP Construction ahead of schedule (1%) SCADA programming progressing well and at the 50% milestone. Field instruments ordered Ongoing optimization Cobalt plant (new and old integration) Commissioning Plan being refined Ore Blending Strategy being refined 13

14 WOL Project Site Progress Progress: January 2016 to Present 14

15 Millions Jun-15 Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 WOL Project - S Curve WOL S-Curve at 31st December 2016 $ $ $437 $ $ $ $ $284 $284 $ $ $ $85 $147 $117 $116 $50.00 $- $50 $43 Project Budget Actual Payments PTD Actual Commitments PTD Forecast Payments 15

16 WOL Project - Project Satistics # of new tanks 123 # of pumps 260 # of automated valves 1058 # of manual valves 5700 Estimated length of: Piping 132 km Instrument cables 160 km # of instruments Each 38 meter thickener support structure contains 7.5 km of weld 655 truck deliveries to site since project inception 16

17 Socio-Economic Contributions Our People 3,926 employees and 2,254 contractors in 2016 $64 million on salaries and $6 million on health Focus on training and capacity-building programs Procurement 30% of our spend for procurement allocated to local suppliers and contractors Governance Policies and procedures align to the highest mining industry standards The company endorses the EITI (Extractive Industries Transparency Initiative) and the Voluntary Principles on Security and Human Rights Community Development $6 million investment in surrounding communities in 2016 Focus on 4 areas: Health, Livelihoods, Education, Infrastructure Our community strategy is aligned to National Program for socio-economic development 17

18 Social Investments Health Malaria vector control: indoor and outdoor spraying in communities and installations, nets distribution, awareness campaigns, etc. Support to vaccination campaigns, training modules for medical staff and drug donation. Support to the national program against HIV, PNMLS: awareness activities and training of medical staff, rehabilitation of facilities Support to Mwangeji hospital: renovation of facilities, donations of drugs and equipment Education Construction: University of Kolwezi and primary schools Support to local technical institutes Summer camps for 3,500 children to keep them away from illegal artisanal mining 18

19 Social Investments (continued) Infrastructure Contribution to Lualaba Bridge construction Industrial wells to increase the volume of water to provide to the population of Kolwezi. Manuel bore wells in rural areas Rehabilitation of REGIDESO power line and donation of pumps for water distribution Community development We support 88 cooperatives with more than 3,000 members, with inputs, training and business development opportunities (agriculture, livestock, fish farming, beekeeping, welding, sewing, carpentry, small trade) 19

20 DRC Power Project Summary INGA MW for KCC, Mumi and partners 350 MW of new power and 1000 MW transmission from INGA to Kolwezi Reimbursed via 40% credit to power bills Additional 10% withheld for maintenance fund Excess MW available to the population Status and Timeline Planned completion: Turbine G27 Q Turbine G28 Q World Bank Project refurbishments online soon: G21 (Q2 2017) and G22 (Q3 2017) G-27 Stator Financial Total funded as at 31 March 17: $355 mio Total spend as at 31 March 17: $344 mio Total rebates recovered: $63.5 mio 20

21 Q&A and Contacts Contact Details Tel: Fax: Website: 21