Kansanshi Mining Plc Extract from 2019 Annual Report

Kansanshi Mining Plc (KMP) had sales revenue of ZMW18.36 billion (US$1.64 billion) for the financial year ended 31 March 2019 [2018: (ZMW16.08 billion) (US$ 1.68 billion)]. This was
lower by 3% from 2018 reflecting lower copper sales volumes partially offset by higher realized metal prices. Net profit after tax of ZMW3.12 billion (US$278.87 million) was lower than the
ZMW3.93 billion (US$411.52 million) reported in 2018 reflecting lower sales revenues.
Copper production for the financial year ended 31st December 2018 was 251,522 tonnes, slightly higher than 2017 (250,801 tonnes) primarily due to higher throughput and grade on the
sulphide and mixed ore circuits, as well as higher recoveries on the oxide circuit due to higher acid availability from the smelter compared to 2017. No concentrate was processed through
the high-pressure leach due to the processing of tarnished sulphide material.
Gold production was 130,019 ounces, about 8% lower than in 2017 mainly due to lower gold feed grades. Gold plant improvements commenced during the fourth quarter and will continue during the first quarter of 2019.
Cash costs were reduced due to acid sales and there being no major smelter shutdown in 2018, partially offset by higher fuel costs. AISC (All-in Sustaining Cost) of $1.55 per lb. was $0.07 per lb. lower than 2017 reflecting lower C1 cash cost and deferred stripping, partially offset by higher sustaining capital expenditures and royalty costs.
The Kansanshi Smelter achieved record production and throughput in 2018, having treated 1,381,637 DMT (Dry Metric Tonnes) of concentrate, a 14% increase over 2017 exceeding design capacity of 1.2 million DMT. The overall copper recovery rate achieved was 97%. During the year, the smelter processed 11,682 DMT of concentrate purchased from third parties to ensure smelter maintains maximum feed rate and acid production levels during the wet season.
A dividend of ZMW223.8 million (US$ 20 million) was declared for year ended 31 March 2019 [(2018: ZMW745.68 million) (US$78 million)]

Kansanshi Reduces Costs with Linatex

Kansanshi, Africa’s largest copper mine, is located near Solwezi in Zambia. The mine site is very remote, so getting parts and replacement material to site is time consuming and costly.

Of particular concern for the operation was excessive wear in the tailings lines, as well as the overflow tank in the continuous counter-current decantation (CCD) circuit.

There is approximately 8km of tailings pipes running from the plant to the tailings dam. The mine had previously lined its pipes with a combination of high-density polyethylene (HDPE) liners and alumina ceramic tiles. These, however, only achieved a wear life of approximately nine months.

Kansanshi approached Weir Minerals Africa for an alternative solution and the company, which has a long-standing relationship with the mine, specified Linatex premium rubber to line the tailings pipeline. Known for its excellent wet abrasion properties, Linatex rubber also requires a considerably shorter time for lining installation when compared to alumina ceramic tiles.

The lining was completed well within the allotted time, saving Kansanshi unnecessary and costly plant downtime.

After 36 months in operation, the Linatex lining showed minimal signs of wear, and the installation has reduced the mine’s total ownership cost by over R1.6 million (US$107,000) per year.

Kansanshi also needed a more cost-effective wear solution for the overflow tank in the CCD circuit. This had previously been lined with alumina ceramic tiles, which only lasted between 60 and 90 days. The tiles were wearing away quickly due to the high impact and abrasion of the stones and sand flowing through the tank. Wash out between the tiles was preventing the tiles from adhering to the metal substrate and the subsequent damage to the tank required repair work.

In response, the Weir Minerals team specified Linagard nitrile-based rubber (NBR). The expected cost savings from the increased production and reduced maintenance offset the installation costs.

The Weir Minerals technical lining manager was on site for the duration of the tank re-lining to provide technical assistance to Kansanshi’s maintenance team.

Since installation, the Linagard NBR 30 has lasted 36 months without any visible signs of wear. According to Weir Minerals, this represents 18 times longer wear life than the previously installed alumina ceramic tiles and eliminated the need to repair the tank every 2-3 months.

Kansanshi has experienced significantly reduced downtime and increased productivity since the installation of the Linatex solutions, and mine maintenance personnel can focus on other areas of the mine. Weir Minerals stated that the mine’s costs have been reduced by R10.4 million (US$698,000) per year with its Linatex solutions.


Kansanshi Flags Off 2019/2020 Farming Season

Kansanshi Mining Plc has flagged off the 2019/2020 farming season by releasing farming inputs to more than 7,400 farmers in Solwezi and the surrounding areas in North-Western Province.

Solwezi District Commissioner Rosemary Kamalonga, who flagged off the 2019/2020 farming season, said government recognized the importance that Kansanshi Mining Plc attached to uplifting people’s living standards.

She said it was relieving to note that Kansanshi Mining Plc, which had trained more than 36,000 farmers under its Conservation Farming Programme, had continued to distribute farming inputs to farmers supported by the mine’s Corporate Social Responsibility (CSR) wing.

“Government is happy with its current partnership with Kansanshi Mining Plc in the crusade to improve food security through concerted efforts to ensure that agriculture assumes its rightful position as an alternative to mining and that Solwezi alone can be a food basket for Zambia,” Kamalonga said.

She added that the government equally recognized the mining company’s efforts to meet various community needs and extend social services to the people.

Kamalonga expressed government’s gratitude to what Kansanshi Mining Plc had done to empower residents in Solwezi and surrounding areas.

Kansanshi Foundation Supervisor Maximillian Katanga explained that 12,600 bags each of D Compound, Urea and seed respectively were ready for distribution to local farmers.

“Farmers pay K425 towards the inputs comprising a 50Kg bag of Urea, a 50Kg bag of D Compound and 10Kg bag maize seed to which Kansanshi adds the balance for each farmer so that they can manage to complete one lima of crops. 300 tonnes of lime has also been distributed to farmers, free of charge, with a view to boosting their yields,” explained Katanga.

Solwezi District Agriculture Coordinating Officer (DACO) Muyobo Shimabale also expressed gratitude for being part of the programme and thanked Kansanshi Mining Plc for supplementing what the Ministry of Agriculture was doing.

“I wish to encourage farmers to continue practicing conversation farming as it is in tune with climate change. When conversation farming is practiced, even in low rainfall periods, farmers are able to get the best results,” Shimabale said.

One of the beneficiaries of the farming inputs, Victoria Musumali, who produced 48 bags of maize from one lima during the 2018/2019 farming season, thanked Kansanshi Mine for the input support because she was able to feed her family and sell surplus maize to the Food Reserve Agency (FRA) and pay for her children’s school fees, among other needs for the family.

Kansanshi Mine provides training in farming’s best practice to farmers, farming input loans and close monitoring of the farmers’ activities to ensure maximum returns from their farming projects.

The model applied in the farming practices strictly observed sustainable permaculture rotation of maize, soya and groundnuts with minimum tillage, the use of mulch and early planting.

Zambia’s copper production rises to 861,946 tonnes in 2018

Zambia has recorded a marginal increase in its copper production for 2018 to around 861,946 metric tonnes from 799,329 tonnes recorded in 2017, boosted by First Quantum Minerals’ (FQM) operations in Kalumbila District.

But last year’s increased copper output still means that Zambia remains Africa’s second-biggest producer of the red metal, with the Democratic Republic of Congo (DRC) expected to hit over 1.2 million metric tonnes.

According to the official Ministry of Mines data, Zambia’s total copper production last year marginally rose to an estimated 861,946 tonnes from 799,329 tonnes recorded in 2017.

The total copper production included all of the country’s 10 large scale mining operations as well as small-scale mining operations, which accounted for at least 10,859 metric tonnes from the total tonnage.

Data reveals that although FQM’s Kansanshi Mining Plc recorded a marginal drop of 249,532 tonnes last year from 250,803 tonnes in 2017, its output in 2018 was the highest among all 10 mining companies in the country for a third successive year.

Additionally, Ministry of Mines Permanent Secretary Paul Chanda explained that FQM’s Sentinel Copper Mine in Kalumbila District produced record output of 223,655 metric tonnes, which helped contribute to Zambia’s overall copper production increase.

“The performance of the sector was better in 2018 relative to 2017. The increase in copper production is attributed to: i. The ramp-up in production at Kalumbila; ii. Improved plant availability and utilization at the Tailings Leach Plant at KCM coupled with higher grades; iii. Commissioning of the Synclinorium Shaft at Mopani in Kitwe has increased volume of ore being hoisted,” Chanda explained in a statement released, Wednesday.

Both Kansanshi and the Sentinel’s copper output last year constitute for 473,187 tonnes out of the country’s total production or nearly 55 percent from just two operations.

And 6 other mining companies equally recorded upward copper production output last year.

These included: Mopani Copper Mines, whose output hit 62,191 metric tonnes from 44,860 tonnes in 2017; Konkola Copper Mines (KCM), whose output rose to 93,165 tonnes last year from 84,436 tonnes in 2017; Chibuluma Mines, who recorded 11,258 tonnes in 2018 from 10,194 tonnes in 2017; CNMC Luanshya, whose output increased to 50,363 tonnes last year from 43,206 tonnes in 2017 and Sino Metals, who recorded 9,312 tonnes from 7,100 tonnes, while Lubambe’s copper production hit 22,074 tonnes from 18,037 tonnes during the period under review respectively.

On the other hand, Barrick Gold’s Lumwana Copper Mine saw its output fall to 101,890 tonnes last year from 116,170 tonnes in 2017, while NFCA recorded 27,644 tonnes down from 27,706 tonnes during the period under review respectively.

But Zambia’s increased 2018 copper production still means that the country remains Africa’s second-biggest producer of the red metal, with the DRC expected to hit over 1.2 million metric tonnes.

The DRC first managed to surpass Zambia as the continent’s biggest copper producer after that country managed to produce over 900,000 metric tonnes of copper in 2013, registering a sharp rise and surpassing Zambia’s 754,916 tonnes produced that year.

Source: News Diggers

Kansanshi smelter exceeds its Q1 target. Owned by ZCCM-IH & FQM

LUSAKA, ZAMBIA – First Quantum Minerals has recorded a 39 per cent increase in production at its Sentinel mine in the first quarter of 2018, compared with the same period of last year.

While the company’s Kansanshi smelter at Solwezi exceeded its target for the quarter, with 350,591 tonnes of concentrate processed.
The mining firm has also reported comparative earnings of US$49 million, even after a US$121 million loss realised under a programme to hedge copper sales, for which no tax credit is available.

“We are pleased with the quarter’s results in all aspects of the company. The solid performances at our Zambian operations are of particular note considering the severity of the seasonal rains,” noted FQM Chairman and CEO Philip Pascall, after the company released its first quarter 2018 financial and operating results on Thursday.

In executing several proactive measures to strengthen the balance sheet and improve liquidity, the global mining company FQM  ended the quarter with US$810 million in net unrestricted cash and cash equivalents, US$1,670 million of committed undrawn facilities and in full compliance with all financial covenants.

The mining firm has also put in place a new US$400 million five-year term facility agreement in the subsidiary that owns the Sentinel mine. Repayments are scheduled to start in December 2019.

The mining firm also completed a US$1.85 billion senior note programme, which will be used to repay an existing term loan facility, the outstanding balance on a revolving credit debt facility, fees associated with the offering and for general corporate purposes.

“With the reduction in our copper forward sales contracts, the value of maintaining our capital investment programme through a challenging economic environment is becoming more visible. The significant turnaround in our financial results from a year ago is indicative of First Quantum’s enhanced earnings and cash generating capability. This is expected to grow substantially when Cobre Panama begins commercial operations,” said Mr Pascall, referring to the company’s massive US$5.48 billion Cobre Project in Panama, which will become one of the largest copper mines in the world.

“While we had several successes in the quarter, we also had a few challenges. Such occurrences are not unexpected in the resource industry with the onset of improved commodity prices and sentiment. While this can be momentarily distracting, these matters do get resolved through open discussion and transparency which we are committed to,” Mr. Pascall concluded.


About First Quantum Minerals Ltd
First Quantum Minerals Ltd is a global metals and mining company producing mainly copper, gold, nickel and zinc. The company’s assets are located in Zambia, Spain, Mauritania, Australia, Finland, Turkey, Panama, Argentina and Peru.
In 2017, First Quantum produced 573,963 tonnes of copper, 199,736 ounces of gold and 17,837 tonnes of nickel.
In Zambia it operates the Kansanshi mine – the largest copper mine in Africa – and smelter and the Sentinel mine in Kalumbila.
The company is listed on the Lusaka and Toronto stock exchanges.


ZCCM-IH | Further Cautionary Renewal

ZCCM Investments Holdings PLC (“ZCCM-IH”) Files a Notice of Arbitration against Kansanshi Holdings Limited and Kansanshi Mining PLC.

On 26 October 2016, ZCCM-IH filed a Notice of Arbitration in London against Kansanshi Holdings Limited and Kansanshi Mining PLC for various Claims arising from transactions between Kansanshi Mining Plc and FQM Finance Limited. ZCCM-IH applied to the Arbitral Tribunal to bring a derivative claim on behalf of Kansanshi Mining PLC which application was heard on 10-12 January 2018.

Further to the Cautionary Renewal released by ZCCM-IH on 6th February 2018, regarding these matters and in compliance with the requirements of the Securities Act No 41 of 2016 and the General Obligations of Disclosure under the Continuing Obligations of the Listings Requirements of the Lusaka Securities Exchange, shareholders are informed that on 22nd February the Tribunal denied ZCCM-IH permission to bring its proposed derivative claim on behalf of Kansanshi Mining PLC.

On 22nd March 2018, following the award denying permission, ZCCM-IH filed an Arbitration Claim in the Commercial Court in London applying to challenge the award dated 22nd February 2018.

Shareholders of ZCCM-IH are accordingly advised to exercise caution when dealing in securities of the Company until further information is published.

By Order of the Board
Chabby Chabala
Company Secretary

Issued in Lusaka, Zambia on Tuesday, 10th April 2018

Lusaka Securities Exchange Sponsoring Broker
T | +260-211-232456
E | advisory@sbz.com.zm
W | www.sbz.com.zm
Stockbrokers Zambia Limited (SBZ) is a founder member of the Lusaka Securities Exchange and is regulated by the Securities and Exchange Commission of Zambia

First Issued on 1 November 2016

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.

Kansanshi Mining Plc Extract from 2017 Annual Report

Kansanshi Mining Plc (KMP) had sales revenue of K14.51 billion (US$1.47 billion) (2015: K9.69 billion (US$1.49
billion) for the financial year ended 31st December 2016. Although total copper production was up 20% at 272,843 tonnes (2015: 226,674 tonnes), realised prices were lower than the previous year resulting in a decline in revenue. Gold production was 9% higher at 148,220 ounces (2015: 136,257 ounces) due to higher concentrate production.

Over the next five to six years the Company plans on gradually shifting towards sulphide mining as oxide materials coming out of the mine are reducing. As a result there was need to double the Sulphide ore throughput to sustain current Copper Production levels. If the latter is not done the levels of production would gradually drop from 250,000 tonnes in 2017 to 245,000 tonnes in 2018, then to 240,000 tonnes in 2019, 202,000 in 2020, 174,000 in 2021 and would continue to decline to levels of 50% of current production post 2021.

In this connection, a US$1.5 billion investment in the Company has been envisaged to sustain the said production and significantly improve other facets of mine operations. Additional smelter capacity would in turn be required as the current Smelter capacity would not be able to cater for increased Sulphide concentrate production. High level electricity would have to be supplied to the mine so as to also capacitate the two Smelters. The Company already has grave concerns over the security of power supply from ZESCO. Since the reduction of power supply from 200 megawatts to 165 megawatts, parts of the business had to be shut down such as the High Pressure Leach system which was still not operating.

The profit for the year 2016 was K1, 248.3 million (US$126.5 million) (2015: loss of K9.11million (US$1.4 million) and had been added to the retained earnings to contribute towards raising the US$1.5 billion required for capital projects.

No dividends were paid during the year ended 31 December 2016 (2015: K52.04 million (US$ 8 million).

Mine boosts rural town in Zambia

The mining town of Solwezi, 633 Kilometres North West of Zambia’s capital Lusaka, has been transformed into an active centre of business eyeing markets beyond borders.

Host to three mining giant outlets, Kansanshi, Lumwana Kalumbila, the provincial capital is attracting trade from neighbouring Angola in the west and Democratic Republic of the Congo (DRC) in the North.

Until recently Kalumbila mine was part of Solwezi but the government has hived it off from there creating a new district all together.

“But even then Solwezi still has a foothold in there (Kalumbila) in that every little thing that residents of Kalumbila need they have to travel here,” said a local trader Amon Bwembya Kikupa.

Within a few years, three shopping malls have sprung up along a litany of development structures from hotels, lodges, and filling stations to new restaurants.

A new civic centre building has been constructed while many government blocks have been rehabilitated if not replaced by modern ones.

A number of banks have set up camp there while those who moved earlier have opened up new buildings.

A recently constructed $2million City mall just on the edge of the town towards Kasempa and Mwinilunga roads has not only added impetus to the status of the district but has given a complete new outlook of the former low level rural town.

Like many parts of Zambia Solwezi has witnessed a housing construction boom that has wiped out huge areas of idle land including some shanty townships and replaced them with new modern housing units.

As mining thrives in the area other businesses are proportionally sprouting locally and spilling activities into neighbouring Angola and the DRC.

Since the Angolan civil war ended followed by a long period of tranquil Angola has embarked a countrywide reconstruction programme which has benefitted even some Zambians who have gone to work there.

On their part Zambians have stepped up trade in foodstuffs such as eggs, Tomatoes and other vegetables in need in the former Portuguese colony.

To enhance trade deals and cement cultural relations between the two countries the office for the Angolan Consular general has been opened in Solwezi.

The office has played a critical role in helping refugees wishing to return home.

On the other side, the 160 Kilometre stretch from Solwezi to Kipushi, the Congolese border town is a hive of activity as cross border trade thrives people of Kolwezi in the DRC and Solwezi in Zambia.

The North western province as a whole has in recent years seen an increase in maize production and residents of Kipushi and other border areas are beneficiaries of the grain sold to communities through informal and formal deals.

Beans and sorghum are common delicacies from Solwezi and the rest of the province found among consumers in the DRC.

A North Western Province Chamber of Commerce official said an interview recently the organization was working with the Zambia Development Agency (ZDA) to enhance business liaison between Angola. Zambia and the DRC, through trade missions.

Beyond that the DRC enjoys the largest swathe of copper-rich land called the Lufilian Arc which borders with Zambia.

The arch extends from Copperbelt and North Western province into DRC’s Katanga province . Solwezi lies within this arch while on the other side there is Kolwezi, thus the mining activities in the arch have therefore strengthened relationships between peoples of the two countries.

It is common to find trucks ferrying huge mining equipment from South Africa using the Solwezi –Kipushi route into the DRC.

Similarly a lot of mineral exports are funneled from the DRC through Solwezi to the Copperbelt onward to further South.

A recent visit to Solwezi however, revealed that a lot more is needed to make more accessible the north western province, dubbed the new Copperbelt,

Within the district civic leaders under the now adopted decentralization policy, have serious challenges to improve roads.

Resources have to be mobilized from mining companies there and other operators to achieve the task.

Except for the main highway that runs in the middle of the city centre, and about a 10 Kilometre stretch from the main road to Kansanshi mine most of the roads are not tarred, thus glazing the positive development the town has seen in recent years.

Source: Herald Express

First Quantum Faces $1.4 Billion Claim From Zambian Firm

ZCCM Investments Holdings, the state-controlled Zambian company that holds minority stakes in most of the country’s copper mines, plans to claim as much $1.4 billion from First Quantum Minerals Ltd. after accusing the Vancouver-based company of fraud. The Canadian company’s stock fell.

The claim includes $228 million in interest on $2.3 billion of loans that ZCCM-IH said First Quantum wrongly borrowed from the Kansanshi copper mine, as well as 20 percent of the principal amount, or $570 million, according to an internal company presentation, dated Nov. 4, obtained by Bloomberg.

The company is also seeking $260 million as part of a tax liability the Zambia Revenue Authority said Kansanshi owed it, as well as the cost of the mine borrowing money commercially that ZCCM-IH said could have been avoided.

ZCCM-IH, in which the Zambian government has a 77 percent stake, said in papers filed in the Lusaka High Court on Oct. 28 that First Quantum used the money as cheap financing for its other operations. ZCCM-IH also last month filed a notice of arbitration against Kansanshi in London over the same matter. ZCCM-IH owns 20 percent of Kansanshi. No figure was mentioned in the court filings.

First Quantum says the claims are “inflammatory, vexatious and untrue,” and that the loans were at fair market rate. First Quantum is in talks with Zambian government representatives to resolve the matter, it said in a Nov. 11 statement. It declined to comment on Monday.

The company’s shares fell 4.6 percent to C$13.57 by Tuesday’s close in Toronto.

FQM, as the company is known, is disregarding the rights of minority owners in ZCCM-IH in dealing directly with government, Philippe Bibard, a spokesman for a minority shareholder group based in France, said by phone Nov. 11.

Source: Bloomberg