Ongopolo, Tsumeb smelter weathering financial crisis

WEATHERLY Mining is considering ways to revive its shuttered Ongopolo mine and also intends investing more than US$6 million during the rest of 2009 to upgrade its smelter at Tsumeb and ensure environmental safeguards.

The company, which is listed on the Alternative Investment Market (AIM) of the London Stock Exchange, is evaluating ‘various strategies for the development of the mines in a sustainable manner in readiness for when markets improve’, Weatherly says in its report for the first quarter of 2009.
While copper is still almost half its value from the metal’s July 2008 peak of US$8 890 per tonne, the market has staged a recovery in the last several weeks, the Dow Jones Newswire reported yesterday. Currently, copper is trading at around US$4 680 per tonne, a six-month high and some 66 per cent up from its December low.
According to Weatherly, Ongopolo still has some 629 174 tonnes of copper. At the time of closure in December, the mine produced nearly 10 000 tonnes of copper concentrate yearly.
The past quarter saw the Tsumeb smelter processing 29 546 tonnes of copper concentrate imported from Bulgaria, Peru, Greece, Zambia and South Africa. This earned the company US$7,7 million, approximately N$69 million at the current exchange rate.
Weatherly managed to keep operating costs in line with expectations, which resulted in an overall operating margin of 23 per cent from January to March.
The company has earmarked more than N$54 million for environmental safeguards and to upgrade the smelter this year.
Breaking down the budget, Weatherly said about N$45 million will go towards the construction of an oxygen plant. This will increase smelting capacity by nearly 40 per cent, with a proportional reduction in unit costs, the report states.
Earthworks for the plant are already underway and the plant will likely be commissioned in the last quarter of the year.
A loan of about N$102 million by Louis Dreyfus Commodities and Chelopech Mining EAD which Weatherly secured in December, will fully fund all its plans for Ongopolo.
According to the quarterly report, Ongopolo offered about 60 per cent of its mobile fleet, with the book value of nearly N$81 million, on auction on April 2. Nearly two-thirds of the equipment was sold, raising about N$23 million.
The company are currently negotiating to sell the rest, for which they expect around N$14 million.
The proceeds of the auction, together with a further N$10 million from real estate sales, will be used to pay creditors of Ongopolo as well as to make future payments to the holders of Weatherly’s convertible loan notes, the company says.
jo-mare@namibian.com.na