Mining Roundup

Weatherly International (LON:WTI) was the sector’s biggest riser in late trading after it said further operational optimisation at Tschudi, plus project development at Otjihase and Matchless offer significant potential value for the company.

“The mineral resources at Otjihase and Matchless plus the installed processing plant capacity present a valuable opportunity for the Company to resume production at higher production rates and lower unit costs than were achieved during the period from 2011 to 2015,” said CEO Craig Thomas.

“Such an opportunity however will be critically dependent on the development of underground mining operator skills.

“The Company has identified a low-risk opportunity to start a skills development programme in a manner which could be incrementally cash-generative at current spot prices within six months of commencement.

“We continue to prudently advance project work in both areas and look forward to updating the market in due course.”


– Tschudi nameplate production rates of 1,417 tonnes per month (tpm) have been re-attained during October, two months earlier than forecast.

– As part of the potential Tschudi expansion project to 20 thousand tonnes per annum (20ktpa), the Tschudi Solvent Extraction (SX) and Electro-Winning (EW) plants have already demonstrated the capacity to operate at 20ktpa rates with significantly reduced capital expenditure requirements.

– At Otjihase and Matchless, safe and productive underground mining skills development is critical to unlocking the opportunity to resume production at sustainable unit costs in future.

– The Company has identified a low-risk and potentially incrementally cash-generative opportunity to commence with its skills development programme at Otjihase. The Company plans to study the opportunity further before taking a decision to proceed.

– The Company intends investigating the potential for such skills development to support a strategic goal of achieving 10-12ktpa of contained copper in concentrate from the underground mines at C1 costs below US$2/lb.

– The Company has entered into a Cooperation Agreement with the holder of the Ongombo prospecting licence, a prospective copper deposit in close vicinity to the Otjihase mine and concentrator.

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Rio Tinto (LON:RIO) has committed to generating $5 billion of additional free cash flow over the next five years from a productivity drive unveiled today as part of its long-term strategy.

In a presentation at an investor seminar in Sydney, Rio Tinto chief executive J-S Jacques underlined the strategy centred around a strong focus on safety, cash generation, a world-class portfolio, commitment to capital discipline and the delivery of superior shareholder returns.

Rio Tinto intends to raise productivity across its $50 billion portfolio of assets by focusing on operational excellence to generate superior shareholder returns through the cycle. This is expected to generate a total $5 billion of further free cash flow by the end of 2021 in addition to the cash cost reduction target of $2 billion across 2016 and 2017.

J-S Jacques said:

“Our strategy plays to our strengths: world-class assets, a strong balance sheet along with commercial and operating excellence. A relentless focus on generating cash, together with capital discipline – prioritising value over volume – means that investors can expect us to deliver superior shareholder returns whilst continuing to invest through the cycle. We have the right team and performance culture in place to deliver this strategy.

“We have placed our assets at the heart of the business to drive improved performance and ensure our resilience through the cycle. We are well on track to meet our target of $2 billion of cash cost savings by the end of next year.

“We are also taking advantage of any opportunity to generate value from mine through to market. Lifting the productivity on our $50 billion asset base creates a low risk and highly attractive return. It will deliver an additional $5 billion of free cash flow over the next five years.

“We are continuing to reshape our portfolio. Following our announcement yesterday that we will sell our Lochaber smelter in Scotland for $410 million, the total of agreed divestments in 2016 now stands at $1.3 billion.”

In addition to improving the performance of its asset base, Rio Tinto is also committed to investing in growing the business. In the near term, this will be delivered via three high-quality growth projects – Silvergrass (Iron Ore in Western Australia), Amrun (Bauxite in Queensland) and Oyu Tolgoi (Copper and Gold in Mongolia).

This investment underpins an annual average copper equivalent growth in excess of two per cent between 2015 and 2025. Longer term, exploration remains a priority for Rio Tinto, with a commitment to maintain the Group’s successful exploration programme.

Rio Tinto is committed to maintaining an appropriate balance between investment in the business and cash returns to shareholders. We expect total cash returns to shareholders over the longer term to be in a range of 40 to 60 per cent of underlying earnings in aggregate through the cycle.

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ZincOx Resources (LON:ZOX) has entered into a MoU with Korea Zinc Company Ltd for the joint development of a recycling plant in Vietnam.

The MoU sets out the principle terms of a Joint Venture Agreement under which KZC and ZincOx will jointly design and develop the new recycling plant.

The MoU foresees KZC funding 100% of a Definitive Development Study (DDS) in sufficient detail to enable the raising of project finance for the construction of the project.

The DDS is expected to cost about US$2.5 million. Korea Zinc will own 51% of a special purpose company which will be set up to develop the recycling plant, with the remaining 49% held by ZincOx.

In the event that the DDS costs more than US$3m, the interest of ZincOx in the joint venture shall be diluted proportionately accordingly to the additional funds that KZC has contributed, however ZincOx will be able to buy back its interest to 49% on the same terms in the following six months.

The recycling plant will be based on the Rotary Hearth Furnace (RHF) technology developed by ZincOx in Korea, and where KZC are the Company’s partners.

The Korean Recycling Plant is one of the world’s largest facilities recycling the waste dust (EAFD) generated by recycling galvanised steel scrap and has a design capacity of 200,000 tonnes per annum.

The recycling plant is planned to treat 100,000 tpa of EAFD and in addition to upgrade both the iron and zinc intermediate products of the RHF to final products.

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Gemfields (LON:GEM) has confirmed that all resolutions proposed at its annual general meeting today were passed by shareholders.

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The sector’s biggest faller was Kibo Mining (LON:KIBO) – down by more than 6.7% in late trading.

At 4:11pm:

(LON:BEM) Beowulf Mining PLC share price was 0p at 5p

(LON:BKY) Berkeley Energia Ltd share price was 0p at 44.75p

(LON:CEY) Centamin PLC share price was -0.45p at 130.65p

(LON:CHL) Churchill Mining PLC share price was -1.13p at 35.88p

(LON:CZA) Coal of Africa Ltd share price was +0.32p at 3.71p

(LON:FDI) Firestone Diamonds PLC share price was -2.13p at 53.13p

(LON:FRES) Fresnillo PLC share price was -1.5p at 1242.5p

(LON:GEM) Gemfields PLC share price was 0p at 49.5p

(LON:GEMD) Gem Diamonds Ltd share price was -1.12p at 110.63p

(LON:HOC) Hochschild Mining PLC share price was -5.35p at 208.55p

(LON:KIBO) Kibo Mining share price was -0.5p at 6.88p

(LON:KMR) Kenmare Resources PLC share price was -7p at 245p

(LON:RIO) Rio Tinto PLC share price was +4.75p at 3104.25p

(LON:VED) Vedanta Resources PLC share price was -6.5p at 869p

(LON:WTI) Weatherly International PLC share price was +0.15p at 1p

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