Chambishi Metals Plc is involved in the mining, refining and tolling of cobalt and copper. As part of the privatisation process of Zambia Consolidated Copper Mines Limited (“ZCCM Ltd”), Anglovaal Mining Limited (“Anglovaal”) acquired the Chambishi cobalt and acid plants and the Nkana slag dumps in 1998. In 2003, ENYA Holdings BV (“ENYA”) acquired Chambishi from Anglovaal, following which ENYA itself was acquired by the London listed Eurasian Natural Resources Company (“ENRC”) in 2010 for US$ 300mn in a related-party transaction; the founding shareholders of ENYA held approximately 15% of the shares of ENRC during the time of acquisition. ENRC, through its shareholding in ENYA, currently holds a 90% shareholding stake in Chambishi, whilst ZCCM-IH holds the remaining 10% shareholding.

Business Model

The core business of Chambishi is in refining copper and cobalt, the majority of which is sourced from the Democratic Republic of Congo from both mines related to ENRC as well as third-party mines. Prior to 2009 in the wake of the global financial crisis, Chambishi sourced its copper from then sister company, Luanshya Copper Mines Plc (LCM, now majority owned by CNMC of China). However, following the subsequent placement of LCM under care and maintenance, Chambishi was also placed under care and maintenance in 2009, and sought out new source mines following the acquisition of ENYA by ENRC in 2010. Currently, Chambishi sources its copper concentrates from BOSS Mine in the Democratic Republic of Congo (DRC) and the cobalt concentrates from Tenke Fungurume Mine (TFM), also in DRC.

The Refinement Process

The refinement process involves channeling the copper concentrate through a Roaster to burn off a portion of the sulphur as sulphur dioxide, thereby changing the chemical composition of the concentrate to make it suitable for electrowinning.

Processed copper and cobalt is transported to various commercial destinations in Zambia and to Johannesburg in South Africa, where it is shipped to customers.

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).

Extract from 2017 annual report

The Company made a profit before tax of K43.42 million (US$4.4 million) (2015: Net loss of K260.83 million
(US$40.1 million) and its current liabilities exceeded its current assets by K2,776.79 million (US$270.6 million) (2015: net current liability position of K1,885.63 million (US$289.9 million). The Company also had a deficit in shareholder funds of K1,232.42 million (US$120.1 million) (2015: Deficit in shareholder funds of K809.80 million (US$124.5 million).

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.

No dividends were paid in 2016 (2015: Nil).

Copper

Extracting value from tier one assets by improving efficiencies and operations.