Weatherly International PLC Quarterly Operations and Production Update (9108E)

TIDMWTI

RNS Number : 9108E

Weatherly International PLC

22 July 2016

22 July 2016

Weatherly International plc

("Weatherly" or "the Company")

Quarterly Operations and Production Update

Weatherly International plc (AIM: WTI) announces its update for the quarter ended 30 June 2016.

Summary

-- Tschudi production for the quarter was 3,812 tonnes of copper cathode, with the decrease in production from the previous quarter being attributable to increased groundwater inflow rates being experienced at levels which exceed those anticipated in the BFS

-- C1 costs for Tschudi for the quarter were US$4,689 per tonne, increasing due to the reduced production and actions taken to manage the groundwater inflow

-- C1 costs for the nine months from 1 October 2015 to 30 June 2016, since Tschudi has been in commercial production, remained below guidance at US$4,199 per tonne

-- Production of 17,000 tonnes of copper cathode is expected to be achieved for the year ending 30 June 2017 with forecast C1 unit costs expected to be in the range of US$4,100-4,200 per tonne

   --     Dr Wolf Martinick and Mr Charilaos Stavrakis to retire from the Board 

Craig Thomas, CEO of Weatherly, commented:

"The Tschudi operations have been hampered during the quarter by groundwater inflows significantly higher than predicted during the feasibility study. Expertise and equipment have been procured to resolve the issue and full production rates are expected to resume before the end of the 2016 calendar year.

I would like to take this opportunity to personally thank Dr Wolf Martinick and Mr Charilaos Stavrakis for their invaluable contributions and counsel which they have provided in their time as members of the Board."

Tschudi

Production performance

Production results for the fourth quarter of the financial year to 30 June 2016

 
                            Quarter   Quarter   Quarter   Quarter 
                             ended     ended     ended     ended 
                             Sep-15    Dec-15    Mar-16    Jun-16 
-------------------------  --------  --------  --------  -------- 
   Total (Ore + Waste) 
    Mined (000 tonnes)       6,282     6,489     6,091     6,826 
-------------------------  --------  --------  --------  -------- 
    Ore Tonnes stacked 
       (000 tonnes)           821       772       583       556 
-------------------------  --------  --------  --------  -------- 
    Ore Stacked grade 
        (per cent)           0.73      0.83      0.81      0.88 
-------------------------  --------  --------  --------  -------- 
 Copper Cathode Produced 
         (tonnes)            3,554     4,076     4,442     3,812 
-------------------------  --------  --------  --------  -------- 
 

During the quarter, open pit mining operations at Tschudi reached the depth where the water table was intersected and groundwater inflow to the pit occurred. Based on hydrogeological studies, conducted as part of the Bankable Feasibility Study (BFS), certain rates of groundwater inflow were expected, and the operation was equipped to deal with the highest level of inflow rates predicted.

The water inflow rates experienced have, however, exceeded the highest rates indicated in the BFS studies. As a result it has been necessary to design, procure and commission additional groundwater management systems and infrastructure whilst engaging additional Namibian and international specialist consulting expertise to assist with this process.

The immediate impact has been a delay in mining the scheduled ore volumes from the pit to supply to the heap leach operation, with resulting reductions in copper output.

As such production for the quarter was 3,812 tonnes of copper, 10% below target rates of 4,250 tonnes per quarter. Current expectations are for production levels in the September 2016 quarter to be approximately 15% below nameplate. Production is then expected to return to design rates by the end of the December 2016 quarter.

As a result of reduced production, additional costs to deal with the higher levels of groundwater inflow and adverse exchange rate movements, C1 costs for the quarter increased to USD4,689 per tonne.

Despite the events described above, overall for the financial year just completed (from Commercial Production commencement on 1 October 2015 to 30 June 2016) C1 unit costs of USD4,199 per tonne were achieved. This figure remains below the bottom end of the guidance range of USD4,250-4,350 per tonne. On production, after reaching nameplate production rates for the first time in December 2015, the following six months of operations have delivered 97% of nameplate output.

The leaching behaviour of ore placed on the heap continues to be as expected in terms of both leaching rates and acid consumption. The Solvent Extraction and Electro-Winning plants continue to perform well, and have demonstrated the ability to produce at 1,500 tonnes per month rates when sufficient copper in solution is available from the heap.

Provided that groundwater management proceeds as expected, for the coming financial year to 30 June 2017 the Company still expects to produce 17,000 tonnes of copper cathode, recovering by financial year end from any shortfalls expected in the coming months. Forecast C1 unit costs for the financial year are expected to be in the range of USD4,100-4,200 per tonne, albeit with expectations that earlier quarters with lower production levels will incur higher unit costs than the overall average expected for the year.

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 Mine Finance (Master) Fund I LP on the subject.

Board Restructuring

As part of continuing efforts to reduce costs, the Company announces that Dr Wolf Martinick and Mr Charilaos Stavrakis have retired from the Board, and will not be replaced in the near term.

Dr Martinick was the co-founder and initial Chairman of the Company as well as being a key investor in the Company from its beginnings in 2005. Wolf's vigorous support and encouragement over the years has been of great value to the Company.

Mr Stavrakis joined the Company in 2013, and has been Chairman of the Audit Committee since that time. He has provided wise counsel during a period of considerable financial and business restructuring.

Their commitment, guidance and advice throughout has been most valuable and greatly appreciated. The Board wishes them well in their future undertakings and would like to thank both Directors for their contributions over the years.

Disputes with LogiMan

Following several disputes between Ongopolo Mining Limited (OML), the Namibian subsidiary of Weatherly, and LogiMan (the Engineer-Procure-Construct (EPC) contractor responsible for the Tschudi plant construction) arising from LogiMan's work on the Tschudi plant, the Company anticipates that arbitration proceedings will likely arise to determine those disputes. The Company will provide further updates on this as appropriate.

For further information please contact:

   Weatherly International plc                                       [phone] 

Craig Thomas, Chief Executive Officer

Kevin Ellis, CFO and Company Secretary

   RFC Ambrian Limited                                                     [phone] 

(Nominated Adviser & Broker)

Nominated adviser contact: Stephen Allen or Jonathan Stephens

Broker contact: Kim Eckhof

Blytheweigh [phone]

(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 25,000 tonnes per annum of copper production.

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

This information is provided by RNS

The company news service from the London Stock Exchange

END

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July 22, 2016 02:00 ET (06:00 GMT)