Metorex sells stake in fluorspar

Ines Schumacher | Wed, 29 Jul 2009 16:36

[miningmx.com] -- METOREX has created some breathing space for itself by selling 15% of its Vergenoeg fluorspar mine for R108.8m to black economic empowerment consortium Medu Capital.

Metorex is disposing of non-core assets to fund the ramp-up of production from its Ruashi copper/cobalt mine in the Democratic Republic of Congo.

"The money will be split between Ruashi and our other debt fulfillments," Metorex CEO Terence Goodlace told Miningmx.

"Our position remains relatively unchanged but we have some breathing space right now," he added.

Metorex has more than R2bn of debt, a position Goodlace has described as "extremely onerous" and one that he'd like to eliminate by the end of 2009.

Companies operating in South Africa have to have 15% black ownership of their assets by this year and 26% by 2014 to comply with mining regulations and to qualify for new-order mining and prospecting rights.

Metorex's shares closed down two percent on Wednesday at 309 cents. It hit a year low of 115 cents, a far cry from the 12-month high of 1,981 cents.

A good portion of debt was run up at the Ruashi project, which has come in over time and over budget. Goodlace replaced Charles Needham as Metorex chief executive at the start of March.

Goodlace's priority is to get Ruashi right. This has entailed a drilling programme and mine rescheduling and revisiting the designs as well as bringing more engineering skills into the company.

The debt burden is also a top consideration, entailing Metorex telling the market it will dispose of non-core assets.

At the end of June, Metorex sold for R386m its 53.4% stake in JSE-listed gold producer Pan African Resources to which it had already sold its wholly owned Phoenix Platinum tailings project for around R70m.

Metorex cautioned investors that it was still in talks, raising the possibility it may sell more assets.

These could be the Chibuluma copper mine in Zambia or South African gold and antimony producer Consolidated Murchison, a mine Needham identified as non-core at the Mining Indaba in February.

There is also the Sable copper treatment plant in Zambia, which had handled early oxide concentrate from Ruashi. Sable is a converted zinc plant and it has zinc tailings that Metorex at one stage planned to treat.

It's debatable whether Metorex would sell Chibuluma, given Metorex's copper and cobalt strategy.