JSE-listed Metorex has gone from being a diversified miner to a copper/cobalt play with far less debt baggage and a company 
that will soon have a far less onerous copper hedge at its Ruashi mine, in the Democratic Republic of Congo (DRC).

The once debt-laden company has also 
secured a short debt holiday for itself, which is one of the perks of its new Ruashi debt 
arrangement, which was triggered by shareholders last week when they supported the 
reviving company’s clawback offer.

While a third of Metorex’s Ruashi copper will continue to be hedged until 2012, from the end of June, the company will no longer have to contend with the fixed-price arrangement that currently punishes it mercilessly at a time of rising copper price fortunes.

The R586-million gained from the clawing back of shareholders has allowed the company 
to pay down its project financing facility and trigger that far more benign debt regime.

“The new debt arrangement is far more manageable for us,” Metorex CEO Terence Goodlace tells Mining Weekly.

But the clawback is not the end of the total $100-million capital-raising story, but merely 
an initial subscription, which is being followed 
by further equity raising in the form of a rights issue, for which circulars were distributed last week.

Meanwhile, under the new debt arrangement, debt repayments reduce from $22-million every six months to $16-million every six months, with the debt holiday perk until January 1, 2011.

The bad news is that Metorex still has 7 800 t 
of copper that has to be delivered into the 
onerous $3 900/t Ruashi hedge between March and the end of June.

“Then we’re into the new era,” Goodlace tells Mining Weekly.

The company will start delivering into the new 16 200-t hedge at $5 972/t from July and then enter another 12 000-t hedge deal – at between $6 600/t and $7 600/t – from July 1, 2011, to June 30, 2012.

“It puts us in the position to start new feasibility work, to continue to strengthen the balance sheet and to set the company up for growth into the future,” he adds.

The payment of the $35-million brings the Ruashi debt to $100-million and a put 
option has been acquired at no cost to keep the 
second 12 000-t hedge price at $6 600/t in the July 2011 to June 2012 period.

Metorex says that the new hedge book 
mitigates the impact of potential negative movements in the copper price on Ruashi’s ability to service its Standard Bank debt.

Goodlace is prioritising feasibility work on the Kinsenda, Lubembe and Musonoi copper/
cobalt projects, also in the DRC, while simul-
taneously expecting to keep Ruashi, Chibu-
luma and Sable production at the levels of the December quarter.

Ruashi, which milled 328 078 t of ore in the December quarter, is reportedly continuing its positive trend, with quarterly copper production having increased by 32,1% ,to 7 518 t, 
and cobalt by 21,9%, to 812 t; Chibuluma 
produced 138 491 t of copper and Sable 1 270 t.

Goodlace believes that Dilala, with 19,1-million tons of potentially high-grade copper, has the makings of a good mine.

Copper supply continues to be stressed and demand continues to grow. But becoming a copper play and getting itself out of debt have come at a cost.

Since its recapitalisation programme was activated last year, Metorex has had to dispose of fluorspar and gold assets and refocus the company on base metals.

There is still no news on Metorex’s negotiations with Bernard Swanepoel’s To The Point (TTP) on the future of its troubled Consolidated Murchison antimony/gold operation, which Goodlace says the company would prefer to see saved than closed and which TTP may acquire as a reward for putting the oper-
ation back on its feet and saving Metorex mine closure, retrenchment and Department of Mineral Resources hassles.

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