March 2016

Annual Report Summaries

NFC Africa Mining Plc Extract from 2016 Annual Report

NFCA continued with the development of the South East Ore Body project. The company reported project expenditure of K2,669.2 million (US$270.2 million) as at 31st March 2016. Total planned project investment is K8,219.1 (US$832 million). Once completed, the project is expected to extend the life of the mine for 20 years. The design and annual capacity at full production is estimated at 3.3 million tonnes of ore containing 60 thousand tonnes of copper. The project is expected to be completed in 2018.

There were no dividends paid during the year ended 31st December 2015 (2016: nil).
Annual Report Summaries

Ndola Lime Company Ltd Extract from 2016 Annual Report

Ndola Lime Company Limited (NLC) reported total revenues for the financial year ended 31st March 2016 of K196.6 million (2015: K195.7 million) and a loss after tax of K86.3 million (2015: K17.7 million).

The company’s results during the year were affected by reduced sales margins, prolonged run of the inefficient rotary kiln, year-end inventory adjustments, additional depreciation charges arising from the commissioned new plant and exchange losses.

ZCCM-IH continued to provide financial support towards the completion of the Ndola Lime Recapitalisation Project. During the year an additional shareholder loan of K28.7 million (US$2.82 million) was provided. The project is expected to increase the company’s production volume at a reduced unit cost of production by using alternative cheaper fuel and is still undergoing hot commissioning.

The conversion of the ZCCM-IH shareholder loans into equity amounting to K659 million significantly improved NLC’s gearing.

There were no dividends declared during the year under review (2015: nil).
Annual Report Summaries

Mopani Copper Mines Plc Extract from 2016 Annual Report

During the financial year ended 31st December 2015, Mopani Copper Mines Plc (Mopani) reported net revenue of K11, 017 million (US$1,121 million) (2014: K8, 696 million (US$1,337 million)). The net loss was at K2, 815 million (US$285 million) mainly as a result of lower copper sales prices and losses on forex revaluations (2014: K150 million (US$23 million).

During the year ending 31st December 2015, Mopani produced a total of 92.2 thousand tonnes of copper from own source (2014: 109.9 thousand tonnes). Total production including third party feed totalled 184.7 thousand tonnes (2014: 185.1 thousand tonnes).

Mopani Copper Mines (MCM) commenced the partial suspension of operations in September 2015 and reduced smelter operating capacity. This was done in view of the lower copper environment. During the suspension period, MCM focused on making capital improvements on the Synclinorium Shaft at Nkana, and the Mindola Deeps and Mufulira Deeps projects. The Synclinorium project was successfully commissioned on 5th May 2016 on time and on budget at a total project cost of $323m. The 1,280m shaft will extend the life of the Nkana mine by 20 to 25 years. The two other shafts, the Mufulira and Mindola Deeps shafts are being sunk at a budgeted cost of $$559m. The projects are scheduled to be completed in the first half of 2017. The capital projects are aimed at reducing operational costs and improving long-term competitiveness.

There were no dividends paid during the financial year ended 31st December 2015 (2014: nil).
Annual Report Summaries

Lubambe Copper Mines Extract from 2016 Annual Report

Lubambe Copper Mine Limited’s (LCM) financial results for the year ending 31st March 2016 showed revenues of K931 million (US$94.2 million) (2015: K1,071 million (US$164.7 million)) and reported a net loss of K3,810.2 million (US$385.7 million) (2015:K539.2 million (US$78 million) loss). The loss was driven by LCM’s impairment of property, plant and equipment upon revision of the mine plan and a decrease in the short term copper price outlook. An impairment of K1,105.8 million (US$111.94 million) was recognised in the income statement as part of operating expenses.

LCM continued to face operational challenges during the year under review. The major challenge LCM has faced in the recent past has been dilution of concentrates with the effect that production ramp up could not be achieved due to stoppable reserves required not being generated at the rate planned on account of slower than anticipated access development progress and overall rates being below target. Following an extensive ore body stoping design review conducted by SRK Consulting, Lubambe evaluated various slot development methods and equipment requirements with the recommended solution being inverse raise using 3x Sandvik DL411-15 long hole drill rigs.

There were no dividends declared during the year ended 30th June 2015 (2014: nil)
Annual Report Summaries

Kariba Minerals Ltd Extract from 2016 Annual Report

For the financial year ended 31st March 2016, Kariba Minerals Limited (Kariba) reported revenues of K19.3 million (2015: K11.1 million) with a profit after tax of K5.6 million (2014: K0.06 million).

The company’s current liabilities exceeded its current assets by K32.5 million (2015: K22.2 million) and the company had negative equity of K55.3 million (2015: K39.1 million) as 31st March 2016. During the period under review, Kariba held two auctions for high quality amethyst that grossed over US$653,800 in total revenue. Going forward, the company will continue with its operational activities with continued support from the shareholders. Kariba projects profitability in 2018 that will be driven by an increase in mining production.

There were no dividends declared during the financial year ended 30th June 2015 (2014: nil)
Annual Report Summaries

Kansanshi Mining Plc Extract from 2016 Annual Report

Kansanshi Mining Plc (KMP) had sales revenue of K15, 699 million (US$1, 586.1 million) (2015: K10, 204.4 million (US$1, 568.7 million) for the financial year ended 31st March 2016. The net loss for the year was at K5, 110.9 million (US$517.4 million) (2015: Profit of K4,169.6 million (US$792.7 million). Total copper production was down 14% at 226,674 tonnes (2015: 262,287 tonnes) due to lower oxide and sulphide throughput during the first half of the year.

KMP intentionally reduced throughput in order to match KMP’s acid consumption with the smelter’s ramp-up to commercial production, while gold production was 12% lower at 136,257 ounces (2014: 154, 431 ounces) due to lower concentrate production and lower head grade. The lower sales volumes were offset by the introduction of the KMP smelter in 2015 that recorded revenue of US$403 million.

In 2015, KMP completed the copper smelter well ahead of schedule and commercial production was declared on 1st July 2015. KMP’s smelter processed 709,188 tonnes of concentrate in 2015 and produced a total of 150, 292 tonnes of copper anode and 645,000 tonnes of sulphuric acid. The KMP smelter achieved an overall copper recovery of 98%.

Subsequent to year end, ZCCM-IH filed a Notice of Arbitration on 26th October 2016 in London (UK) against Kansanshi Holdings Limited and Kansanshi Mining PLC. Further, on 28th October 2016 ZCCM-IH commenced legal proceedings in Lusaka, Zambia, against First Quantum Limited, FQM Finance Limited, Philip K.R. Pascal, Arthur Mathias Pascal, Clive Newall, Martin R. Rowley and Kansanshi Mining PLC for various claims arising from transactions between Kansanshi Mining Plc and FQM Finance Limited.

Total dividends paid during the period under review amounted to K59.3 million (US$8 million) (2015: K113 million (US$18 million). The amount payable to ZCCM-IH was K11.9 million (US$1.6 million) (2015: K22.6 million (US$3.6 million).
Annual Report Summaries

CNMC Luanshya Copper Mines Extract from 2016 Annual Report

CNMC Luanshya Copper Mines plc (CNMC) recorded a turnover of K1,867.7 million (US189.1 million) for the year ended 31st March 2016 (2015: K1, 741.1 million (US$267.7 million). The loss after tax was K1, 052.1 million (US$106.5 million) (2014:K72.2 million (US$11.1 million) profit).

CNMC planned to produce 46,000t of copper metal which included 16,000t copper in concentrate from Baluba Mine and 30,000t of copper cathode from Muliashi Mine. By the end of 31 December 2015, Baluba Mine and Muliashi Mine produced 11,371t and 33,101t of copper metal respectively. Thus in 2015 the total copper production was 44,472t, representing 96.68% of the annual plan. As noted, Muliashi Mine exceeded its annual production target for 2015 whilst Baluba Mine did not achieve its annual production target.

The failure by Baluba mine to meet its target is attributed to the difficulty in mining the gently inclined thin ore body with its variable structure and the increasing reclaimed tonnage and decreasing geological grade and also the fact that the mine had been put on Care and Maintenance since September 2015 because of power shortages.

There were no dividends paid during the year ended 31st December 2015 (2014: nil).
Annual Report Summaries

Chibuluma Mines Extract from 2016 Annual Report

Net revenue for the financial year ended 31st December 2015 was K656.9 million (US$66.5 million) (2014: K691.4 (US$106.3 million)). Net loss over the same period was K312.2 million (US$31.6 million) (2014: K144.4 million (US$22.2 million profit)). Chibuluma Mines Plc’s (CMP) cash position reduced to US$0.056 million as at 31st December 2014 (2014: US$8 million). The loss was mainly due to the low copper prices and an impairment loss of US$13.4 million on property, plant and equipment.

Production was negatively affected by the poor availability of mine equipment, which, coupled with low copper prices led to constrained cash flow at the company. Consequently, CMP embarked on cost saving measures and a survival plan with emphasis on reduced and targeted mining and processing activities at the mine.

As mine reserves get exhausted CMP has been exploring the Chifupu project for the last two years to extend the life of mine and have been actively exploring new mining activities. However, due to cash flow constraints, works on the Chifupu project have reduced and CMP is evaluating the option of starting production early at the Chifupu project to recover some of the investments incurred on the project. No dividends were paid for the financial year ended 31st December 2015 (2014: US$10.8 million).
Annual Report Summaries

Chambishi Metals Extract from 2016 Annual Report

During the financial year ended 31st December 2015, Chambishi Metals Plc (Chambishi) generated total revenues of K2,015.3 million (US$204 million) (2014: K1, 883 million (US$289.50 million). The net loss was at K396.1 million (US$40.1 million) (2014: K88.5 million (US$13.6 million).

ZCCM-IH has been engaging with Chambishi on the perennial losses and it was agreed that Chambishi would have to scale up production to be able to generate enough gross profits to cover all its operational costs and to generate profits. This would necessitate creating further capacity particularly for copper beyond the current capacity of 55,000 tonnes. A study is being undertaken to assess the financial implications of this proposal.

During the period under review, Chambishi commenced a research project to improve revenue at the plant. The research involves plant optimization, improved technology at the plant to improve recoveries and a global market study to identify suitable concentrates from which high value metals such as gold and silver can be extracted.

Industry News

Zambia’s 2016, 2017 copper output seen flat at 700,000t

LUSAKA – Zambia’s copper production will be around 700 000 t this year and next year before rising to one-million tonnes in 2018, a top government official said on Monday.

Copper production in Africa’s second-biggest producer of the metal inched higher to 711 515 t in 2015 from 708 000 t the previous year mainly due to a new mine owned by Canada’s First Quantum Minerals.

“We are likely be in the same level as last year because the pricing of copper has been consistently low and some mines have frozen production,” Mining ministry permanent secretary Paul Chanda told Reuters.

Chanda said Zambia’s copper production would jump to about one-million tonnes in 2018 when prices of the metal were expected to start rising.

Zambia also launched a pilot project for introduction of a new system under which mining companies would be required to report their production electronically.

Zambia Revenue Authority Commissioner of Customs Dingani Banda said during the launch that the new system would improve accuracy in reporting of mineral quantities and quality by mining companies.

“Overall we expect that these measures will enhance collection of revenue,” Banda said.

Banda said the new system would start with Chambishi, Launshya and Lubambe mines before rolling it out later this year.

Other mining companies operating in Zambia include Glencore, Vedanta Resources and Barrick Gold.

Source: Mining News Zambia