Weatherly International Plc Regulatory News (WTI)

Weatherly International Plc

("Weatherly" or "the Company")

Interim Results for the Period from 1 July 2015 to 31 December 2015

Weatherly International plc (AIM: WTI) announces its interim results for the period from 1 July 2015 to 31 December 2015.

Operational Summary

· Tschudi achieved nameplate production rates of 17,000 tonnes per annum during December 2015, with production for that month of 1,420 tonnes of copper cathode.

· First quarter of Commercial Production at Tschudi delivered production of 4,076 tonnes or 96 per cent of nameplate.

· Weatherly exceeded its increased Tschudi production guidance of 10,400 tonnes of copper cathode by 2 per cent to reach 10,659 tonnes produced in CY2015.

· In December, the Company announced a JORC (2012) reserve and processing update for its Tschudi mine.

· Tschudi ore reserves of 24.4Mt at 0.85 per cent copper for 214,000 tonnes of contained copper metal after mining depletion of 8,000 tonnes.

· Pit optimisation work has decreased Strip Ratio by 13 per cent from 7.5:1 (waste:ore) to 6.5:1.

· Life of mine C1 costs expected to be reduced by 9 per cent to USD 3,865 per tonne of copper cathode.

· Identified opportunity to increase processing capacity from 17,000 to 20,000 tonnes per annum.

· Weatherly's Central Operations were converted to project development status in order to prepare the mines for future production of larger volumes of copper concentrate, at lower unit costs, when market conditions improve.

Financial Summary

· The price for copper remained under pressure falling from US$5,720/tonne at the beginning of the financial year to US$4,701/tonne at 31 December 2015. While this put pressure on our revenues, the depreciation of the rand against the US dollar from 12.2 to 15.5 reduced our costs in US dollar terms.

· The Group made an overall operating loss of US$6.7m. Central Operations made a loss of US$5.2m, Tschudi US$0.6m and group costs were US$0.9m.

· Tschudi achieved Commercial Production at the end of September 2015. Up to that point all costs and income were being capitalised. The loss of Tschudi relates to the period since achieving Commercial Production and is after US$3.0m of depreciation leaving income before depreciation and interest of US$2.4m.

· Tschudi achieved a C1 cost of US$4,080 for the period.

· The Central Operations suspended production on 14 September and the results for the 6 months include losses to this point, costs associated with suspending production and subsequent care and maintenance costs. Included within the losses is depreciation of US$1.6m.

· The cost reduction programme instigated to reduce overhead costs in the UK in the first half of 2015 is bearing fruit with costs in the first half of 2014 of US$1.3m being reduced to US$0.9m in 2015.

· Short term loans include US$8.6m relating to Tranche C and D of the Orion Mine Finance Loan which were executed within the period, and $12.1m relating to Tranche B. Quarterly Repayments on Tranche B have been deferred and will now begin on 31 May 2016. Tranche C is due for repayment on 31 August 2016 and Tranche D in December 2016.

· Inventory includes over 3000t of copper cathode delivered to Walvis Bay at 31 December 2015. Against this we received inventory loans from our offtaker, Orion Mine Finance, of US$10.0m. These are classified as loans until the cathode is aboard ship when it is offset against income.

· The Group had cash of US$2.8m at 31 December 2015 and had US$3.7m of unpaid inventory delivered to Walvis Bay. US$2m of delayed VAT payments were received in the first week of January.

· If copper prices remain at current levels it is unlikely that the Group will generate sufficient surplus cash to meet all loan repayments and the Group's going concern will be dependent on Orion Mine Finance's continued support, of which there is no certainty. .

Corporate Summary

· Craig Thomas was appointed Chief Executive Officer on 1 July 2015 after the retirement of Rod Webster.

· The board has been supplemented by other appointments: Krzysztof Szymczak, Managing Director of Logiman (pty) Ltd, Weatherly's second largest shareholder, and by a representative of Orion Mine Finance, Weatherly's major shareholder and funder, which is Edwin Bennett, an Investment Associate with Orion Mine Finance.

· In December 2015, Mr Peter Christians commenced work on site as Tschudi General Manager.

Events Subsequent to the Balance Sheet date

· In January 2016, Weatherly announced the release of its option to purchase the Tsumeb tailings facility from Dundee Precious Metals Inc for US$4m, which will be settled by applying a credit, at the rate of US$40 per tonne, against the cost of sulphuric acid being supplied by Dundee to the Company.

Craig Thomas, CEO of Weatherly, commented:

"Despite difficult market conditions, this period has been one of significant progress for Weatherly and I am pleased with the achievements the Company has made since July 2015.

"Operations at the Tschudi mine have exceeded the Company's guidance and the first full quarter of commercial production, achieved at the end of last year, was a major milestone. In addition to this production success, Weatherly has also produced a resource, reserve and processing update that increases ore reserves, reduces life of mine C1 costs and identifies expansion opportunities.

"I look forward to the continuing progress at the Tschudi mine and updating the market accordingly."

For further information please contact:

Weatherly International Plc +44 (0) 20 7936 9910

Craig Thomas, CEO

Kevin Ellis, CFO & Company Secretary

RFC Ambrian Limited +44 (0) 20 3440 6800

(Nominated Adviser & Broker) Samantha Harrison

Blytheweigh +44 (0) 20 7138 3204

(Financial PR) Tim Blythe

About Weatherly

Weatherly is an AIM listed copper mining company operating in Namibia in southern Africa. Its principal assets are one operating open pit copper mine called Tschudi and two underground copper projects called Otjihase and Matchless. 

These assets will enable Weatherly to achieve its medium term goal of establishing a mining business capable of sustaining approximately 25,000 tonnes per annum of copper production.

The Company also has a 25% stake in the AIM listed company, China Africa Resources plc (CAF), which is developing a lead/zinc mine called Berg Aukas also in Namibia.

Condensed consolidated income statement

for the period from 1 July to 31 December 2015

Condensed consolidated statement of comprehensive income

for the period from 1 July to 31 December 2015

Condensed consolidated statement of financial position

as at 31 December 2015

Condensed consolidated statement of changes in equity

for the period from 1 July to 31 December 2015

Condensed consolidated cash flow statement

for the period from 1 July to 31 December 2015

Notes to the condensed consolidated financial statements

for the period 1 July to 31 December 2015

1. a. Basis of preparation

These interim condensed consolidated financial statements are for the six months ended 31 December 2015. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 30 June 2015. The information included in these interim condensed consolidated financial statements in respect of the year ended 30 June 2015 does not constitute all the information required for annual statutory accounts at that date.

These financial statements have been prepared under the historical cost convention, except for revaluation of certain properties and financial instruments.

The annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. These condensed consolidated interim financial statements (the interim financial statements) have been prepared in accordance with the accounting policies adopted in the last annual financial statements for the year to 30 June 2015.

The accounting policies have been applied consistently throughout the Group for the purposes of preparation of these condensed consolidated interim financial statements.

b. Nature of operations and general information

Weatherly International plc and its subsidiaries' ("the group") principal activities include the mining and sale of copper cathode and copper concentrate.

Weatherly International plc is the group's ultimate parent company. It is incorporated and domiciled in the United Kingdom. The address of Weatherly International plc's registered office, which is also its principal place of business, is 107 Fleet Street, London EC4A 2AB. The company's shares are listed on the Alternative Investment Market of the London Stock Exchange.

Weatherly International's consolidated interim financial statements are presented in United States dollars (US$), which is also the functional currency of the parent company.

These consolidated condensed interim financial statements have been approved for issue by the Board of Directors on 1 March 2016.

The financial information for the period ended 31 December 2015 set out in this interim report does not constitute statutory accounts as defined by the Companies Act 2006. The Group's statutory financial statements for the year ended 30 June 2015 have been filed with the Registrar of Companies.

c. Going Concern

The Group incurred a loss before tax of US$11.4m during the 6 months ended 31 December 2015 and, at that date, had net current assets of US$29.2m.

Under the terms of the amended loan the first instalment on Tranche B was due on 30 November 2015. Orion, Weatherly's largest shareholder and lender, confirmed it has agreed to defer both this and the next instalment due on 29 February 2016. If copper prices remain at current levels it is unlikely that the Group will generate sufficient surplus cash to meet subsequent loan repayments and the Group's going concern will be dependent on Orion's continued support, of which there is no certainty.

On 14th September the Group announced it had suspended production at its Otjihase and Matchless mines, Central Operations. There will be ongoing care and maintenance costs which will need to be funded from Tschudi and well as the costs of the holding company, Weatherly International.

In addition to deferring the payments due on 30th November 2015 and 29th February 2016, Orion provided a further US$4m loan on 18th December repayable within 350 days to meet the working capital requirements of the Group. This was in addition to a US$4m loan on 15 September 2015 on the same terms.

The directors believe that with the support of Orion to defer loan repayments, Tschudi can generate sufficient surplus funds for the Group to remain as a going concern. However there are a number of uncertainties around the assumptions that have a potentially negative impact on the Group's ability to deliver the forecast cash flows.

These are:

· That Tschudi is able to achieve and maintain nameplate production levels of 1,400t of copper cathode a month throughout the period. The risks of not achieving this revolve around not being able to mine and process sufficient ore tonnes to achieve this output as well as the leach time and metallurgical recovery rates remaining in line with the feasibility study as we mine into different types of ore.

· Copper price fluctuations not having a further material adverse affect on the Group's profitability.

· As the Group's revenue streams are converted from US dollars to Namibian dollars exchange rate fluctuations could have a material adverse effect on the Group's profitability.

· The timing of income is uncertain. Sales are dependent on the date our customer, Orion, ships the copper cathode. The Group recovers VAT receipts in Namibia, the timing of which is uncertain.

The likely ongoing need for Orion's support along with the above conditions indicate the existence of a material uncertainty which may cast significant doubt about the Group's ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business. The Group financial statements do not include the adjustments that would result if the Group was unable to continue as a going concern.

2. Segmental reporting

Business segments

In identifying its operating segments, management generally follows the physical location of its mines.

The activities undertaken by the Central Operations segment include the sale of copper concentrate from Otjihase and Matchless mines. The revenues of Otjihase and Matchless are indistinguishable as the ore coming from both mines passes through the same concentrator and the two mines are viewed as one operating unit. The activities undertaken by the Tschudi segment include the sale of copper cathode from the Tschudi mine.

Each of these operating segments is managed separately as each of these service lines requires different technologies and other resources as well as marketing approaches.

The measurement policies the group uses for segment reporting under IFRS 8 are the same as those used in its financial statements.

The group's operations are located in Namibia and the UK. The operating segments are located in Namibia, while the corporate function is carried out in London.

Segment information about these businesses is presented below.