Investee Companies

Annual Report Summaries

Investrust Plc Extract from 2016 Annual Report

Investrust Bank Plc (Investrust) recorded a 19% decrease in net interest income to K39.77 million during the year ended 31st December 2015 (2014: K49.30 million). This was driven by the increase in interest rates in fixed term deposits and inter-bank lending. During the year under review, the bank did not expand the physical branch network. Rather, the bank focused on consolidating operations in its branch networks.

In 2015, Investrust embarked on a capital raising exercise through a Claw back Rights Offer to meet the minimum capital requirement set by Bank of Zambia. ZCCM-IH fully underwrote the offer and the results, subsequent to year end, indicated that ZCCM-IH ended up with 48% of the shareholding in the bank

ZCCM-IH made an application for waiver of a mandatory offer to the SEC and the SEC approved the application on condition that ZCCM-IH sold down its shareholding to below 35% which is the trigger for a mandatory offer. ZCCM-IH has since sold 3.2% of its shares in the bank and is currently at 45.4% shareholding.

The bank’s share price on the LuSE closed the period under review at K13.50 (2014: K13.50).

There were no dividends declared during the financial year ended 31st March 2016 (2015: Nil).

 
Annual Report Summaries

METS Extract from 2016 Annual Report

Misenge Environmental and Technical Services Limited (METS) earned a total of K6.22 million as revenue for the year ended 31st March 2016 (2015: K6.23 million). METS recorded a loss after tax of K2.9 million (2015: K0.6 million).

METS was awarded a contract as a project management consultant firm during the nine month preparatory stage of the Zambian Mining Environmental Remediation and Improvement Project (ZMERIP). ZMERIP is a World Bank led project whose “objective is to reduce environmental health risks to the local population associated with the mining sector in critically polluted areas in Kabwe and Copperbelt provinces through improved capacity of the key institutions”. This is expected to improve METS’s income base going forward.

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

 
Annual Report Summaries

Maamba Colliers LTD Extract from 2016 Annual Report

Maamba Collieries Limited (MCL) reported total revenue of K121.9 million (US$12.3 million) for the year ended 31st March 2016 (2015: K94.5 million (US$14.6 million) and had profit after tax of K52.9 million (US$5.4 million) (2015: Loss K503 million (US$0.069 million)). The company’s current assets exceeded its liabilities by K1, 180 million (US$105.6 million) as at 31st March 2016 (2015: US$103.7 million). Additionally, the company has accumulated losses amounting to K999.5 million (US$89.4 million) (2015: K1, 136.4 million (US$95.2 million).

MCL’s 300-megawatt fully integrated coal-fired power plant reached Financial Closure on 28th July 2015. The peak funding of the project was capped at US$843 million and funded on a debt/equity ratio of 70:30. ZCCM-IH and Nava Bharat (Singapore) Pte Limited (Nava Bharat) have contributed US$253 million toward the project, and US$590 million is debt in form of long term loans from Development Financial Institutions and Commercial Banks.

The power plant is the first private power project in the Sub-Saharan region to receive Export Credit Agency insurance cover from China Export and Credit Insurance Corporation (Sinosure).

MCL signed a 20-year power purchase agreement to supply 100% of the power plant’s output to ZESCO.

In May 2015, ZCCM-IH issued a letter of credit (LC) of US$8.75 million, through Standard Chartered Bank Zambia as a contingent equity support for the thermal power plant at Maamba. In support of the LC, the funds were placed as a fixed term deposit at a Kwacha interest rate of 14% and fixed exchange rate of K7.385/US$.

Subsequent to year-end, the first 150 MW was commissioned on 7th August 2016 and the next 150 MW was commissioned in November 2016 where after Nava Bharat will be responsible for the operation and maintenance of the power plant.

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