[miningmx.com] — EVERYTHING kept going right at copper/cobalt
producer Metorex in the six months to end-June and the group is now pushing ahead
with its next project in the Democratic Republic of Congo (DRC) – Kinsenda.
But the benefits from Kinsenda will accrue to new owner Jinchuan Group after 98.6%
of Metorex shareholders voted on Friday to accept the Chinese conglomerate’s offer
of 890c a share to take over the company.
According to Metorex chairman Rob Still, Metorex will be delisted from the JSE during
December by when the “processes and regulatory permissions required to advance
the Jinchuan offer to shareholders are expected to be completed.’
What is not yet clear is the fate of Metorex’s top management which Jinchuan vice-
president Sanlin Zhang told Miningmx on August 16 that he was keen to retain.
Zhang highlighted the proven abilities of the Metorex management team and stressed
that Metorex would be “a very good platform’ on which management could develop
professionally.
He added that, after the transaction, Metorex would continue to be run as a stand-
alone operation with its own board of directors and management.
But Zhang declined to specify whether current Metorex CEO Terence Goodlace would be kept in charge of the group.
Goodlace told Miningmx on Monday that, “this is something that the management of
Metorex has been very careful about.
“We decided we would not negotiate for ourselves until the shareholders had decided
on whether to accept the offer. Now that they have accepted the offer we will get
into negotiations with Jinchuan on the details of our future.’
Goodlace declined to comment when asked if he wanted to stay in charge of Metorex
once Jinchuan had taken over.
In the six months to end-June Metorex increased copper production by 5% to
26,562t and cobalt production by 18% to 1,890t. The group’s mining profit more
than doubled to $131m and net debt was reduced 53% to $29m.
The disposal of Metorex’s Sable assets – consisting of a zinc processing plant in
Zambia – is underway for R190m but those funds are now earmarked to help pay for
the development of Kinsenda.
Money from the sale of Sable was previously going to be paid out to Metorex
shareholders in terms of the takeover offer from Brazilian resource group Vale which
did not want to keep Sable.
Goodlace said the bankable feasible study on Kinsenda was completed by June and
was approved by the Metorex board subject to further studies aimed at “de-risking
and optimizing’ the project.
He said the board had approved $1.4m to be spent on a third phase drilling
programme as well as the ordering of long lead time items worth $30m. Preliminary
project work has started on the site.
Goodlace said, “post the inclusion of all modifying factors the total forecast copper
production from Kinsenda is now estimated at approximately 17,000t/year.
“The key risk to the project remains one of flooding and pump tests were conducted
to test the response of the aquifer and thereby model future groundwater inflows
into the mine.
“The re-modelling exercise increased the estimated inflows from 45,000 cubic metres
per dayto 70,000 cubic metres per day and, as a result of this increase, additional
studies have been recommended to review the mine design and increase the
capacity of water pumping facilities to de-risk the threat of flooding of the mine.’
Total estimated capital cost of the Kinsenda project is now $273m.
The writer owns shares in Metorex.
