Canada-headquartered Katanga Mining on Thursday announced that its basic and diluted loss a share had widened to $0.09 for the first quarter, ended March 31, from $0.04 in the first quarter of 2018.
Adjusted earnings before interest, taxes, depreciation and amortisation (Ebitda) increased to $41.8-million, from $16.3-million in the prior comparable quarter, the Glencore subsidiary reported.
Revenue, including a net provisional pricing adjustment, for the period amounted to $354-million, up from $146-million in the prior comparable quarter.
Copper revenue, meanwhile, increased to $355-million in the first quarter, up from $146.5-million in the first quarter of 2018, as a result of the increase in copper production and sales driven by the completion of Phase 1 of the whole ore leach project.
Cost of sales for the period amounted to $447.3-million, while the gross loss increased to $92.5-million from $31.6-million in the first quarter of 2018. The increased gross loss was driven by an increase in net realisable value adjustment on ore in the stockpile inventory, as well as a provision on obsolete consumable inventories, higher reagent costs at Luilu and an increase in total oxide feed received from the Kamoto concentrator in line with the optimised mine plan.
This, Katanga noted, was offset by an increase in copper revenue owing to an increase in copper production.
Openpit mining costs increased to $29.7-million in the first quarter, owing to an increase in total material mined, an increase in the Kamoto concentrator processing costs to $27.4-million in the same period owing to the reagent costs and an increase in total oxide feed from the concentrator, in line with the optimised mine plan.
Mine infrastructure and support costs increased to $113-million; the majority of which is the inventory obsolescence provision of $46.9-million.
Royalties and transportation costs increased to $56.3-million owing to higher copper revenue and sales tonnes.
In terms of the first-quarter cash flows, Katanga reported that cash flows generated in operating activities before changes in working capital decreased to $27-million in the first quarter.
The decrease in cash flows generated in operating activities before changes in working capital was driven by a decrease in net income owing to increased operating costs and delayed revenue as a result of the temporary suspension of cobalt sales.
Changes in working capital outflows from investing activities increased to $170.9-million.
Cash inflows from financing activities increased to $260-million in the first quarter and relates to drawdowns under a bank loan facility.
In respect of the facility, interest of $452.8-million was owed to parent company Glencore under the loan facilities provided to the company.
In recognition of Katanga’s financial position, Glencore had earlier provided support for additional working capital funding.
Subsequent to March 31, the loan facility was amended to formalise the capitalisation of the interest so that it will now be payable on maturity in 2021.
Additionally, Katanga received a proposal from Glencore which is designed to address the company’s overall indebtedness to Glencore under the loan facilities. Discussions are still ongoing.
Glencore and Katanga, meanwhile, have also taken steps to further formalise Glencore’s ongoing support and to facilitate consideration of the proposal or alternatives for dealing with repayment obligations under the loan facilities.
In furtherance of this, Glencore has agreed to provide the required financial support to the company to enable it to pay its debts as and when they become due and payable in the 12-month period from the date of approval of the unaudited interim condensed consolidated financial statements for the first quarter.