Weatherly International PLC Quarterly Operations and Production Update (8140E)

TIDMWTI

RNS Number : 8140E

Weatherly International PLC

15 April 2014

Weatherly International Plc

("Weatherly" or "the Company")

Quarterly Operations and Production Update

Weatherly International Plc (AIM: WTI) is pleased to announce its update for the third quarter of the financial year ending 30 June 2014.

Highlights

-- All major supply contracts for Tschudi finalised resulting in better than forecast delivery dates and confirming the financial robustness of the project.

   --     Earthworks have commenced, and the build up of the construction camp is 95% complete. 

-- The Company has revised its mining plan at Tschudi and infill drilling is set to start at the end of April.

   --     Tschudi contract to purchase acid from Dundee Precious Metals executed. 

-- Major initiative underway to improve productivity and reduce operating costs at Central Operations.

-- Third quarter production of 61,309t of ore producing 4,424t of concentrate, containing 1,067t of copper.

   --     Hedge book closed out during the quarter. 
   --     Working capital loan with Orion Mine Finance reduced to US$1.93 million. 

Tschudi Project

The bankable feasibility study (BFS) for the Tschudi project was completed in December 2012 and the financial results were announced together with the funding from Orion Mine Finance (then Red Kite). At the time, the BFS resulted in an NPV (@8%) of US$105m based on an average Life of Mine (LOM) copper price of US$6,067/t copper.

Since then considerable progress has been made in concluding all the main operating contracts for the project, specifically,

Executed Contract

Qtr 3, 2013 Basil Read (Mining)

B&E Int. (Crushing)

Qtr4, 2013 Nampower (Power)

Qtr1, 2014 Dundee (Acid Supply)

The Company is currently preparing to update the market with respect to the project's financial status compared with the results of the Bankable Feasibility Study (BFS) released in December 2012 which it anticipates will be available during the second quarter of 2014. In the meantime, the Company is pleased to report that the main cost inputs (mining & crushing rates, power and acid) are, on the basis of the agreed contracts, approximately 10% below those assumed in the BFS (in US$ terms). Further cost information will be provided in due course.

CEO, Rod Webster, commented "It is good to see that, a year on, there has actually been a reduction in the main Tschudi cost inputs and, with current copper prices still above the LOM average price used in the BFS, there should be no overall erosion in project value"

Central Operations

During the quarter, the main underground mining contractor terminated its contract with the Company. Combined with the fall in copper price to US$6,400 per tonne, this decision further accelerated the Company's productivity improvement plans by bringing the underground mining functions in-house immediately. This change to owner mining is part of an ongoing program to overhaul the mines which has been underway since last year. The initial response to the reduction in the underground labour force has been positive both in terms of copper production and employee motivation. We anticipate an immediate cost reduction of 10% as a result of the measures implemented so date.

The changeover from pillar recovery to primary mining at Otjihase is underway, with retreat mining of the remaining easily accessible pillars in the Karuma block, and the accessing of the Hoffnung Fault West primary mining areas. Finally, the Company plans to invest in additional underground mining equipment in the short term, with the objective of improving production levels from those achieved over the past few quarters.

We believe that the combination of these improvements will enable the Central Operations to finally achieve their production target of approximately 7,000 tonnes per year of copper at a considerably lower operating cost.

Production

Production results for the third quarter 2014 financial year are set out in the table below:

 
                     Quarter  Quarter   Quarter   Quarter 
                      ended    ended     ended     ended 
                      Jun-13   Sept-13   Dec-13    March-14 
Ore Treated 
 (t)                 64,872   75,060      75,281    61,309 
 
Grade (%)            2.05     1.72        1.87      1.86 
 
Recovery (%)         93,49    93,02       93,10     93,36 
Copper concentrate 
 (t)                 5,250    5,118       5,330     4,424 
Copper contained 
 (t)                 1,242    1,201       1,311     1,067 
 

Unit cash cost (C1) for the quarter was, US$7,576/t (US$3.42/lb), higher than the previous quarter due to the disruption caused by the changeover from contract to owner mining and poor equipment availability.

Commercial

During the quarter, the Company delivered 1,274 tonnes of copper contained in 6,007 tonnes of concentrate to metal trader Louis Dreyfus at a weighted average price of US$7,360/t copper (US$3.34/lb).

As at 31 March 2014, the Company had,

   -      Available cash (excludes Tschudi drawdown) of US$4.3million at 31 March 
   -      Drawn down  US$34.7million of its US$80 million loan facility with Orion Mine Finance 
   -      Orion working capital loan reduced from US$2.48 million to US$1.93 million 

- Closed out the hedge book and used the proceeds to improve its working capital position. The Company does not envisage re-establishing its hedge book at current copper prices and exchange rates, but will review the situation on a regular basis.

Conference call

The Company will hold a conference call on Wednesday 16 April at 15.00 UK time. If you would like to attend please send an email to [e-mail] and we will send you the dial in telephone number.

About Weatherly

Weatherly is an AIM listed, copper mining company, its principal assets are located in Namibia. It currently has two underground copper mines (Otjihase and Matchless), and is developing the much larger Tschudi open cut mine in the north of the country. These assets will enable Weatherly to achieve its medium term strategy of establishing a copper mining business capable of sustaining approximately 25,000tpa of copper production. The Company also has a 25% stake in AIM listed company, China Africa Resources Plc (CAR), which is currently developing a lead/zinc project at Berg Aukas in northern Namibia.

For further information please contact:

   Weatherly International Plc                                       [phone] 

Rod Webster, Chief Executive Officer

Rolf Gerritsen, Senior Executive

   RFC Ambrian Limited                                                   [phone] 

(Nominated Adviser & Broker)

Samantha Harrison

Craig Francis

   Shore Capital                                                                 [phone] 

(Joint Broker)

Jerry Keen

Toby Gibbs

This information is provided by RNS

The company news service from the London Stock Exchange

END

MSCDBGDSRDBBGSS