JOHANNESBURG (miningweekly.com) – JSE-listed Metorex on Tuesday reported a significant increase in its copper and cobalt output, boosted by the production build-up at its Ruashi mine in the Democratic Republic of Congo (DRC) and higher copper grades at the Chibuluma operation in neighbouring Zambia.

In the 12 months ended June 30, 2010, Metorex's copper production increased by 60% to 50 051 t, while its cobalt production trebled to 3 102 t from 871 t the previous year.

Metorex CEO Terence Goodlace said that the company was hoping to further increase its copper and cobalt production and that the group was forecasting higher prices and demand.

"During the first half of the year, we experienced some technical problems at our Ruashi operation, which cost us around 2 000 t in copper production. These difficulties have now been sorted and both our operations are running well, which makes an increase in production very viable," he said in an interview with Mining Weekly Online.

Goodlace was also upbeat about the prospects for copper prices and demand, which plunged during the global financial crisis.

"Price trends in copper and cobalt have been very positive during the past year, and we have seen a big pick up in the copper prices reaching $7 700/t at one point, together with cobalt prices also looking a lot more positive. Metorex expects this trajectory to continue."

In the longer-term, the group expected the fundamentals, specifically for copper to remain.

"We see supply as stressed in the long term, while demand is on the increase especially from emerging economies such as China, India and Brazil," Goodlace stated.

He said that current copper and cobalt prices, together with a new copper hedge book, boded well for Metorex's mining profit margin going forward.

During the reporting period, the group's cash mining profit increased by 678% to R866-million, at a margin of 31%.

Metorex also reported a slight increase in headline earnings a share to 25,2c a share, compared with 23,9c a share in the same period last year.

Further, the group generated income of R431-million from the disposals of its Vergenoeg Mining Company and Pan African Resources during the year, as part of its restructuring and recapitalisation programme.

Metorex would also dispose of its Consolidated Murchison mine at a cost of R66-million, which would negate any future losses by the R35-million net liability.

On Monday, the company announced Bernard Swanepoel's To The Point (TTP) would buy the antimony gold mine, which reported significant losses over an extended period of time.

Finance costs for the past 12 months amounted to R93-million, mainly related to the Ruashi project finance loan and the Chibuluma term loan. However, Goodlace said that these borrowing costs would be reduced going forward as a result of the reduction in group debt.

The once debt-ridden company has now restored its balance sheet by decreasing its debt by 50% and reported cash on hand at R521-million by June 30.

Goodlace said that the group was comfortable with its current debt levels and would now focus on repaying its remaining debt, mainly through operational cash flows.

"Looking at future project financing, Metorex has adopted a cautious risk-based approach, and will be very prudent in our actions. We have also decided to develop our project sequentially, rather than all at once, which would maximise our access to funding from operational cash and our debt facilities."

Goodlace pointed out that the group had completed its repositioning and recapitalisation drive, which would be the basis on which it advanced its operating and project development strategy.

"Our focus has transitioned from one of survival to that of sustainable growth and we are actively advancing the bankable feasibility studies for the Kinsenda and Lubembe deposits in the DRC."

The base-metals miner said that while it would focus on its growth projects in the near future, merger and acquisition activities could not be ruled out and that the group would consider any promising opportunities.

Metorex's shares have been continuously underperforming during the year, but share prices showed a 4% rise after the company released its results on Tuesday.

The company's stock jumped to R3,80 a share in early morning trade from Monday's closing price of R3,64 a share. By midday, shares were trading at R3,74 a share.