Last checked at 26 Jan 2017 07:00
26th January 2017
Weatherly International plc
("Weatherly" or "the Company")
Quarterly Operations and Production Update
Weatherly International plc (AIM: WTI) announces its update for the quarter ended 31 December 2016.
Summary
· Tschudi production for the quarter was 4,496 tonnes of copper cathode, 5.8% above nameplate, and a record for quarterly production tonnage achieved at Tschudi to date
· With improved production, C1 costs for the quarter have reduced 17% quarter on quarter to US$4,222 per tonne
Craig Thomas, CEO of Weatherly, commented:
"We are pleased to report significantly improved operational results as the groundwater inflows at Tschudi are being well managed. The operational team is focused on achieving the original production target of full nameplate production for the year despite the setbacks encountered in the June and September quarters.
"While market conditions have improved recently in terms of US dollar copper prices, the strengthening of the local currency and the hedging position we had progressively established to ensure financial stability while getting on top of the groundwater issues mean that the Company is still dependent on support from Orion in the near term, and we continue to engage positively with them in this regard."
Tschudi Production Performance
Production results for the quarter ended 31 December 2016
Quarter ended Mar-16 | Quarter ended Jun-16 | Quarter ended Sep-16 | Quarter ended Dec-16 | |
Total (Ore + Waste) Mined (000 tonnes) | 6,091 | 6,826 | 5,703 | 5,546 |
Ore Tonnes stacked (000 tonnes) | 583 | 556 | 670 | 702 |
Ore Stacked grade (per cent) | 0.81 | 0.88 | 0.89 | 0.88 |
Copper Cathode Produced (tonnes) | 4,442 | 3,812 | 3,641 | 4,496 |
C1 Cost (US$/t) | 3,429 | 4,689 | 5,073 | 4,222 |
Management of groundwater inflow via in-pit pumping continues to allow the operations to mine according to the revised plan, and to deliver copper cathode production results for the December quarter almost 6% above nameplate rates. Detailed work continues on the design of long-term groundwater management systems. The aim is to remove groundwater before it enters the pits, further reducing risks of future mining production delays, as well as to reduce operating costs for dewatering compared to the current in-pit systems.
The strong cathode production result in the December quarter and deferral of some mining volumes from the first half of the financial year into the second half of the financial year, while establishing the groundwater management systems have together helped to deliver a solid improvement in C1 quarterly operating costs, with a 17% improvement quarter-on-quarter to US$4,222/t.
The production target for the year remains at 17,000 tonnes despite the reduced production in the September 2016 quarter.
In July, C1 cost guidance of US$4,100-4,200 was provided for the financial year to June 2017. However due principally to the strengthening of the Namibian dollar against the US$ since that guidance was given, full financial year C1 costs are now expected to be increased to approximately US$4,600 per tonne.
While spot copper prices have increased notably during the December quarter, the Company advises that certain hedges had been implemented prior to that price increase, and during the second half of the financial year the Company currently has prices for 3400 tonnes of production fixed at US$5,077 per tonne. This hedging position is in addition to the option (but not the obligation) to purchase up to 700 tonnes per month at US$5,000 per tonne until May 2017 held by Orion Mine Finance (Master) Fund I LP (Orion). This was agreed and announced on 2 June 2016 as a fee in consideration of deferred repayment of loan amounts due. Beyond the current financial year the Company has a hedging commitment of 450 tonnes of copper at US$5,102 per tonne.
Weatherly has previously advised that if copper prices remain at current levels it is unlikely that the Company and its subsidiaries will generate sufficient surplus cash to meet all loan repayments when due. This remains the case and the Company continues to positively engage with Orion on the subject.
For further information please contact:
Weatherly International plc +44 (0) 1707 800 774
Craig Thomas, Chief Executive Officer
Kevin Ellis, CFO and Company Secretary
RFC Ambrian Limited +44 (0) 20 3440 6800
(Nominated Adviser & Broker)
Nominated adviser contact: Stephen Allen / Bhavesh Patel
Broker contact: Kim Eckhof
Blytheweigh +44 (0) 20 7138 3204
(Financial PR) Tim Blythe / Camilla Horsfall / Nick Elwes
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 30,000 tonnes per annum of copper production.