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Annual Report Summaries

Lubambe Copper Mines Extract from 2018 Annual Report

Lubambe continued with restructuring through downsizing of output and the reduction of related labour cost. The largest contributors to the unit cost savings were a reduction in labour cost due to a 66.00% reduction in expatriate labour, a reduction in stoping dilution obtained through an improvement in the mining stoping method, and a 4.00% increase in plant recoveries obtained through plant optimisation initiatives.

This is the first reporting period in which Lubambe operated in accordance with the reduced production target of 80,000 tonnes of ore per month. The reduced target was implemented in March 2016 to curtail operating losses, save cash and preserve the ore body whilst implementing a strategy to upgrade the underground dewatering infrastructure.

During the period under review a labour restructuring programme was successfully concluded which aligned the total labour complement with the revised lower production rate of 80,000 tonnes per month. Ongoing capital expenditure was curtailed to preserve cash with the majority of expenditure being incurred for mine ramp development.

The Lubambe Extension Project was put on hold until an opportune time when conditions are suitable for additional investment. This high-grade area remains an integral part of the future development of the Lubambe ore body.

Lubambe Copper Mine Limited (Lubambe) reported revenues of K517.37 million (US$54.18 million) for the year ended 31st March 2018 [(2017: K824.92 million (US$ 83.65 million)]. Operating costs were above budget at K1,021.84 million US$107.01 million compared to the K973.62 million (US$101.96 million) target due to increased engineering activity as production was being increased. The loss for the year was K350.4 million (US$36.70 million). Lubambe’s financial year was changed to now run from 1st January to 31st December.

For the 9 months to 31st March 2018 Lubambe’s mined volumes were 840, 376 tons of copper ore, above the target of 808,122 tons as activity was being ramped up. Total contained copper produced over the same period was 14,891 tons, above the target of 14,566 tons.

The historical losses had been caused by the initial challenges Lubambe had faced during the project’s development phase which included flooding, dilution during the mining process due a thin ore body thereby increasing running costs. Dilution was further exacerbated by the wide inter-level vertical spacing which was upwards of 17 meters ramp spacing.

During the year under review, EMR Capital of Australia completed the purchase of the ARM and VALE stakes in Konnoco, thereby gaining an 80% ownership of Lubambe. After the acquisition, EMR Capital put in place various interventions at the mining and ore treatment processes to improve production.

Production had initially been capped at 80,000 tonnes of ore to contain costs but in EMR’s business model this level is deemed to be unsustainable. EMR have ramped up and are targeting to reach the 200,000 tonnes of ore production level by 2019.

There were no dividends declared during the year under review (2016: Nil).
Annual Report Summaries

Chibuluma Mines Extract from 2018 Annual Report

Revenue for the financial year ended 31st December 2017 was K671.24 million (US$70.3 million) [(2016: K541.81 million (US$52.8 million)]. Net profit over the same period was K67.12 million (US$7.03 million) [(2016: Loss of K31.09 million (US$3.03 million)]. Chibuluma Mines Plc’s (CMP) cash position reduced to K7.56 million (US$0.76 million) as at 31st December 2017 [(2016: K16.18 million (US$1.64 million)].

The Chibuluma South ore reserve continued to be depleted during the year, life of mine is now only 2 years. The development of the Chifupu ore body progressed well with Capital developments now upto 418 metre level.

On 27 June 2017, the Company incorporated a wholly owned Subsidiary company, Lufwanyama Mining Manufacturing and Trading Services Limited (LMMTS). This initiative is in response to the remaining short Life of Mine of the Company which is expected to cease operations in 2022. LMMTS commenced operations in August 2017 and during the year it did not trade with any external third parties. As part of the capacity building LMMTS were awarded mine development and support contracts at the Chifupu Mine on a competitive basis.

The company continued implementation of various cost saving and cost containment initiatives to ensure it achieved its set KPI’s and advance from a loss to a profitable position. Management continued focusing on identifying and progressing viable initiatives which would assist in extending the footprint of the Jinchuan/Metorex Group in Zambia beyond the current Life of Mine.

There were no dividends declared during the year under review (2016: Nil).
Annual Report Summaries

Chambishi Metals Extract from 2018 Annual Report

The Company had revenues of K3,470.79 million (US$363.5 million) for the year ended 31st December 2017 ahead of budgeted K2,472.04 million (US$258.9 million). EBITDA was K207.94 million (US$21.7 million) compared to budgeted K276,900 (US$29,000). Copper produced for the 12 months to 31st December 2017 was 36,153 tonnes and 2,520 tonnes of Cobalt was produced.

Chambishi Metals Plc has budgeted US$9 million for capital expenditure for 2018 which has been earmarked for the Acid Plant, Copper and Cobalt Processing and some analytical services.

The Eurasian Resources Group has confirmed its intention to continue to provide financial support to the Company to enable it to continue its operations and meet its obligations.

There were no dividends paid during the year under review (2016: Nil).
Annual Report Summaries

KCM Extract from 2018 Annual Report

Konkola Copper Mines (KCM) reported total revenue of K12,251.43 million (US$1,283.0 million) for the financial year ended 31st March 2018 [(2017:K8,621.47 million (US$874.3 million)]. The increase in revenue was attributed to higher metal prices and increased sales volumes. The net loss for the year was at K1,102 million (US$115.4 million) [(2017: K1,367.72 (US$138.7 million loss)].

Total finished copper production during the financial year increased by 9 percent to 195,300 tonnes for the year ending March 2018 (2017: 179 800 tonnes) compared to the previous financial year.

During the year under review, KCM mine metal production volumes remained subdued as lower feed grades and lower copper recoveries at the Tailings Leach Plant offset improvements in production output at both Nchanga and Konkola.

Moving forward, KCM’s strategy continues to be underpinned by vigorously pursuing higher operating productivity levels at the Konkola underground mine, improving recoveries at the Tailings Leach Plant facility, increasing utilisation of the smelter and cost containment.

There were no dividends declared during the year under review (2017: Nil).
Annual Report Summaries

Kariba Minerals Ltd Extract from 2018 Annual Report

Kariba Minerals Limited (KML) reported total revenue of K17.18 million for the year ended 31 March 2018 (2017: K20.64 million). KML reported a net loss of K10.22 million during the financial period under review (2017: K3.45 million loss).

For the year ended 31st March 2018, KML produced a total of 627.52 tonnes of commercial grade amethyst (2017: 712.18 tonnes) and produced 3.54 tonnes of high grade amethyst (2017: 1.86 tonnes). KML ore production was at 11,273 tonnes (2017: 10,517 tonnes). KML held an auction in February 2018 in Jaipur, India during the period under review. A total of 3.35 tonnes of high grade amethyst valued at US$270,000 was sold at the auction. Additionally, KML introduced 1.50 tonnes of a new medium grade amethyst at the auction for the first time and it sold above its reserve price. KML going forward plans to have a schedule of the new medium grade amethyst at the auction.

There were no dividends declared during the financial year under review (2017: Nil).
Annual Report Summaries

Maamba Colliers LTD Extract from 2018 Annual Report

Maamba Collieries Limited (MCL) reported total revenue of K1,172.00 million (US$122.73 million) for the year ending 31st March 2018 [(2017: K100.38 (US$10.18 million)] and had profit after tax of K148.87 million (US$15.59 million) [(2017:K211.2 million (US$2.15 million)]. The increase in revenue and profits was due to the recording of all revenue and costs from the Thermal Power Plant from the commercial operating date in August 2017. The company’s assets exceeded its liabilities by K1,172.1 million (US$123.50 million) as at 31st March 2018 (2017: K1,037.1 million (US$107.92 million). Additionally, the company had accumulated losses amounting to K675 million (US$70.69 million) [(2017: K842.72million (US$87.69 million)].

During the year under review, the 300MW Thermal Power Plant together with the 330kV Transmission Line and Kariba Water Pumping System were taken over from the respective Engineering, Procurement and Construction (EPC) Contractors by MCL. MCL is now operating and maintaining the facilities through its Operations and Maintenance (O&M) Contractor.

MCL extracted 530,030 tonnes of high grade coal (2017: 355,126 tonnes) and 120,893 tonnes of low grade coal (2017: 188,325 tonnes). Coal transported to the Power Plant was at 1,076,216 tonnes (2017: 555,810 tonnes). The Coal Handling and Processing Plant throughput was at 168,934 tonnes (2017: 199,487 tonnes).

The revenue and financial position of the company is expected to improve going forward given the commissioning of the Thermal Power Plant.

There were no dividends declared during the year under review (2017: Nil).
Annual Report Summaries

Kansanshi Mining Plc Extract from 2018 Annual Report

Kansanshi Mining Plc (KMP) had sales revenue of K15.66 billion (US$1.64 billion) [(2016: K 14.51 billion US$1.5 billion)] for the financial year ended 31st December 2017. Gross profit of K6,263.65 million (US$656 million) was higher than that the K1,929.18 million (US$188 million) reported in 2016 on a combination of the increase in sales revenues and lower operating costs.

Copper production for the financial year ended 31st December 2017 was 250,801 tonnes, 1% lower than 2016 (253,272 tonnes) primarily due to lower plant recovery on the sulphide circuit, reflecting the drive to improve the concentrate quality and treatment of weathered material and lower copper recovery on the oxide circuit caused by changes in the ore mineralogy. Copper production was also impacted by reduced mixed final tails processed through the leaching circuit before and during the third quarter smelter shutdown to manage the onsite acid inventory.

Gold production was 140,595 ounces, about 5% lower than in 2016 mainly due to lower concentrate production. AISC (All-in Sustaining Cost) of $1.54 per lb. was $0.03 per lb. lower than 2016. Higher deferred stripping and royalties, treatment and refining charges and a lower gold by-product credit were offset by a credit to site administration costs. The credit followed a review of recoverable costs and operational provisions in the second and third quarters. Higher royalty costs resulted from higher royalty rates, which range from 4% to 6% depending on the underlying copper price.

The Kansanshi Smelter achieved record production and throughput in 2017, having treated 1,211,740 DMT (Dry Metric Tonnes) of concentrate, a 6% increase over 2016 despite the planned third quarter shutdown. Production totalled 297,553 tonnes of copper anode and 1,128,000 tonnes of sulphuric acid, each 16% and 2% higher respectively than 2016. The quality of concentrate treated improved significantly with over 26% copper in concentrate grade compared to 23% recorded during 2016. The overall copper recovery rate achieved was 96%. Production in 2018 is expected to be approximately 240,000 tonnes of copper, and approximately 145,000 ounces of gold. The High Pressure Leach circuit is expected to be in operation throughout 2018, with a 70-day planned maintenance shutdown for relining expected to occur during the second and third quarter of 2018.

At the Board meeting held on 22 March 2018, the Directors proposed dividend payments of K740 million (US$78 million), split as K180 million (US$19 million) related to the year-end 31st December 2016 and K560 million (US$59 million) for the year ended 31st December 2017.
Annual Report Summaries

CNMC Luanshya Copper Mines Extract from 2018 Annual Report

CNMC Luanshya Copper Mines Plc (CNMC) recorded a turnover of K2,559 million (US$268 million) for the year ended 31st December 2017 (2016: K1,701 million (US$172 million). The profit after tax was K 353 million (US$37 million) (2016: K3.79 million (US$ 0.397 million loss)).

CNMC planned to produce 33,000 tonnes of copper in 2017, the actual volume produced was 43,177 tonnes as a result of increased mined volumes at Muliashi mine. Baluba mine remained under care and maintenance during the year with the total care and maintenance costs being K121.26 million (US$12.9 million) in 2017. Works to bring it back into production commenced in the first quarter of 2018.

There were no dividends declared during the year under review (2016: Nil).

Corporate Announcements

ZCCM-IH | Appointment of Board Chairman

In accordance with Section 3.59 of the Lusaka Securities Exchange Listings Requirements, ZCCM Investments Holding Plc (ZCCM-IH) is pleased to announce the appointment of Mr. Eric Suwilanji Silwamba, SC as Board Chairman of the Company effective 6 March 2018.

Mr Silwamba is the Principal Partner at Messrs Eric Silwamba, Jalasi and Linyama Legal Practitioners. He holds a Bachelor of Laws Degree with Merit (LL.B) from the University of Zambia. Mr Silwamba is an Advocate of the High Court of Zambia enjoying the rank and dignity of State Counsel. He has over 30 years’ extensive experience in both private and public practice. Mr Silwamba was elected Member of Parliament for Ndola Central Parliamentary Constituency in October 1991 and was re-elected in 1996 and 2001. He served in very senior positions in government including as former Deputy Minister of Information and Broadcasting Services, Deputy Minister (Special Duties) Office of the President, Minister of Presidential Affairs and Minister of Justice and Government Chief Whip. Mr. Silwamba has had the opportunity of handling some of the most complex and high-profile litigation in Zambia that relate to mining, commercial law, tax, administrative, criminal and constitutional law. He is also a member of the Chartered Institute of Arbitrators of the United Kingdom and a qualified legal draftsperson.

By Order of the Board
Chabby Chabala
Company Secretary
Issued in Lusaka, Zambia on Thursday, 29th March 2018

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First Issued on Thursday, 29th March 2018

Industry News

Electric vehicles are poised to unleash a cobalt boom

EACH new electric vehicle (EV) uses about 10kg (22 lbs) of cobalt. More than half of the world’s reserves and production of the metal are in one dangerously unstable country, the Democratic Republic of Congo. Moreover, four-fifths of the cobalt sulphates and oxides used to make the cathodes for lithium-ion batteries are refined in China. China has already proven willing to restrict exports of rare-earth metals to foreign firms. And although China is not thought to be cornering or manipulating the market for cobalt, growing global demand has still sent the the element’s price soaring.

Non-Chinese battery manufacturers have already begun looking for ways to protect themselves from potential shortages. Their best answer to date is another metal closely associated with cobalt: nickel. Some firms are now producing cobalt-lite cathodes, by raising the nickel content to as much as eight times the amount of cobalt. This allows the battery to run longer on a single charge—but also increases the risk it will burst into flames. So far, the price of nickel has remained flat. But according to McKinsey, a consultancy, by 2025 EV-related demand for nickel is expected to rise 16-fold.

Source: The Economist