The Ruashi project, in the Democratic Re-public of Congo (DRC), is the linchpin of this process, and the high-grade copper/cobalt project has attracted the lion’s share of the company’s expenditure, with R88-million being spent on the project during the six-month reporting period to December 31, 2005 – the group reports that the project is now 70% complete.
The first phase of the project, which is set to be completed in April or May, will treat 70 000 t/m of copper stockpiles. After copper concentrate is produced in the DRC, it will be transported to the Kabwe processing plant, in Zambia. The company reports that ore leaching at the Kabwe plant has already begun. While the first phase will target stockpiles of 3,2-million tons, the second phase will enjoy access to resources of 24,9-million tons at a copper grade of nearly 3% and a cobalt grade of 0,46%. At a commodity price of $2 100/t for copper and $10/lb for cobalt, the group calculates that the project will have a net par value of over $450-million.
“Ruashi will be a significant contributor,” says Metorex MD Charles Needham, adding that the high-margin project will boast an ore value equivalent to 13g/t of gold. Phase 2, which is expected to be completed in the first quarter of 2008, will demand a capital injection of between $120-million and $140-million, compared to the estimated $41-million capital outlay expected for the first phase. Situated 10 km outside Lubumbashi, the Luashi project will have access to good infrastructure and should have a life of over 25 years.
“We will have roads, rails and a powerline in close proximity,” says Needham.
Metroex will have 84% control of Ruashi Holdings, a South African company which will hold an 80% stake in the Ruashi stockpiles and orebodies.
Effective Metorex ownership of the project, says Needham, stands at 67%.
There are also plans to extend Ruashi, with preliminary results encouraging, he adds.
“We have had nothing but support,” notes Needham, adding that “Metorex is fairly well liked in the DRC”. “Copper is wonderful at the moment,” says Needham.
Copper contributed 14,8% to half-year sales revenue and accounted for 20,5% of the group’s earnings before interest, taxes, depreciation and amortisation. While the metal contributed 15% to the company’s revenue for the six months, it only contributed 8% to earnings for the same period in 2004.
Elaborating on the opportunities for miners in the DRC, Needham notes that the mineral deposits in the country are in the “upper percentile”.
“In terms of the Congo, you have to be there,” says Needham.
“We are seeing the rest of the world focusing on the DRC.” Overall, Ebitda increased from R52-million for the six months ended December 2004 to R136-m for the period under review.
Revenue from mineral sales increased by 26% from the comparable period to reach R630-million.
“There have been profit contributions from all divisions,” says Needham.