katanga mining limited 2019 annual general …/media/files/k/katanga-mining-v2/...(including but not...

KATANGA MINING LIMITED

May 2019

2019 Annual General Meeting

2

CAUTIONARY STATEMENT

• This corporate presentation may contain forward-looking statements, including, but not limited tostatements relating to, the improvements related to the WOL Project, Acid Plant and Cobalt Projects, theramp up of production following the commissioning of the WOL Project, Acid Plant and Cobalt Projects,expected annual copper and cobalt production capacities, the outcome of the OSC investigation,commissioning of the second train of the WOL project, ongoing optimization of the WOL process, theimpact of newly acquired or commissioned equipment on operations, the overall expected improvementof recoveries and grades, and the ongoing Power Project. Often, but not always, forward-lookingstatements can be identified by the use of words such as "plans", "expects" or "does not expect", "isexpected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does notanticipate", or "believes", or describes a "goal", or variation of such words and phrases or state thatcertain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved.All forward-looking statements reflect the Company’s beliefs and assumptions based on informationavailable at the time the statements were made. Actual results or events may differ from those predictedin these forward-looking statements. All of the Company’s forward-looking statements are qualified bythe assumptions that are stated or inherent in such forward-looking statements, including theassumptions listed below. Although the Company believes that these assumptions are reasonable, thislist is not exhaustive of factors that may affect any of the forward-looking statements. The keyassumptions that have been made in connection with the forward-looking statements include thefollowing: the ramp up of production following commissioning of the WOL Project will proceed consistentwith management’s plans; the expected improvements to the processing circuit from the WOL Projectwill be realized; there will be no significant disruptions affecting the operations of the Company whetherdue to labour disruptions, supply disruptions, power disruptions, rollout of new equipment, damage toequipment or otherwise; permitting, development, operations, expansion and acquisitions at the (…)

FORWARD LOOKING STATEMENTS

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• (…) Project will be consistent with the Company's current expectations; the Company’s miningconcessions, licenses, permits, rights, titles and other assets and interests in the DRC will continue to berecognized in the DRC; political and legal developments in the DRC will be consistent withmanagement’s current expectations; there will be no adverse impact on the Company arising out of theOSC investigation or the designation of Mr. Dan Gertler by the U.S. government as an SDN; theprovision or procurement of additional funding from Glencore for operations will continue; the T17Underground Mine, additional phases of the WOL Project and the Power Project will be completed; newequipment will perform to expectations; the recapitalization of KCC will be completed by the Companyand Gécamines in a mutually beneficial manner; the exchange rate between the US dollar, South Africanrand, British pounds, Canadian dollar, Swiss franc, Congolese franc and Euro will remain approximatelyconsistent with current levels; certain price assumptions for copper and cobalt will remain consistent;prices for diesel, natural gas, fuel oil, electricity and other key supplies will remain approximatelyconsistent with current levels; production, operating expenses and cost of sales forecasts for theCompany will meet expectations; current ore reserve and mineral resource estimates of the Company(including but not limited to ore tonnage and ore grade estimates) will be accurate; and labour andmaterial costs will increase on a basis consistent with the Company's current expectations.

• Forward-looking statements involve known and unknown risks, future events, conditions, uncertaintiesand other factors which may cause the actual results, performance or achievements to be materiallydifferent from any future results, prediction, projection, forecast, performance or achievementsexpressed or implied by the forward-looking statements. Such factors include, among others, theunforeseen delays or changes to the WOL Project; actual results of current exploration activities; actualresults and interpretation of current reclamation activities; conclusions of economic evaluations; changesin project parameters as plans continue to be refined; future prices of copper and cobalt; (…)

FORWARD LOOKING STATEMENTS (CONTINUED)

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• (…) possible variations in ore grade or recovery rates; failure of plant, equipment or processes tooperate as anticipated; adverse outcomes of the KCC recapitalization process, OSC investigation orfinalization of the New DRC Mining Code; accidents, labour disputes and other risks of the miningindustry; delays in obtaining governmental approvals or financing or in the completion of exploration,development or construction activities; delays due to strikes or other work stoppages, both internal andexternal to the Company, as well as those factors disclosed in the Company's current annual informationform and other publicly filed documents. Although Katanga has attempted to identify important factorsthat could cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions, events or results not to be asanticipated, estimated or intended. There can be no assurance that forward-looking statements will proveto be accurate, as actual results and future events could differ materially from those anticipated in suchstatements. Accordingly, readers should not place undue reliance on forward-looking statements.

• The Company disclaims any intention or obligation to update or revise any forward-looking statementswhether as a result of new information, future events, or otherwise, except in accordance with applicablesecurities laws.

• Tahir Usmani, is the ‘Qualified Person’, as defined in National Instrument 43-101 (NI 43-101), whoapproved the scientific and technical disclosure in this corporate presentation. Technical information inthis corporate presentation is based upon the Company’s NI 43-101 technical report dated March 31,2018, available on SEDAR at www.sedar.com.

FORWARD LOOKING STATEMENTS (CONTINUED)

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Health & Safety Update

Asset Base

2018 Operations Overview

2018 Production Overview

2018 Processing Overview

Restated Financial Statements & Regulatory Matters

WOL / Acid Plant

Socio-Economic Conditions

Social Investments

AGENDA

DRC Power Project

2018 Financial Overview

6

HEALTH & SAFETY UPDATE

• FHP's at Stage 2 compliance • Complete internal review of existing CHMP's

and ensure Critical Controls are in place, and implementation of Critical Control Observation verifications

• Implemented High Risk Work Verification process to include, a HRWV Management Plan, HRWV Procedure, and HRWV Observation Cards

• Implemented Permit To Work system complete with a PTW Management Plan, PTW Procedure, and PTW Observation Cards

• Facilitate employee polling / testing on Safe Work programs to ensure employees understand the programs

2018 FATALITIES & LTIFR 1,000,000 MAN HOURS

1 3 0 7 0 1

0.59

0.43

0.18 0.17

0.11

0.30

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0

1

2

3

4

5

6

7

8

2013 2014 2015 2016 2017 2018

# of

Fat

aliti

es

Year# of Fatalities LTIFR

LTIFR

Health & Safety Initiatives for 2018

7

5

4

3

1

2

10

9

7

8

11

6


Asset Base





WOL / Acid Plant


Social Investments

AGENDA

DRC Power Project


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ASSET BASEGENERAL INFORMATION

75% 25%Joint venture with state-owned

Gécamines

/

275.6 Mt*High grade mineral resource

deposits

3.64%* 0.54%*Est. Avg.

Cu GradeEst. Avg.

Co Grade

16 YearsMineral Reserve LOM

Cuc.300k TPA

Co c.30k TPA

Average Average

1

Processing Infrastructure

KTCConcentrator

LuiluHydrometallurgical Facility

2

WOL train 2 complete and commissioned on schedule

EW4 commissioned

WOL Construction

Completed

Q4 - 18

Dec - 18

*Measured and Indicated mineral resources as per December 2018 Resource and Reserve statement

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ASSET BASEMINING & PROCESSING ASSETS

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LUILU

NEAR WEST

KTO

SICOMINES MASHAMBA EAST

KTE (2021)

KOV UG (2022)

KOV T17 (2025)

KATANGA

KOLWEZI

KITD

PETITLUILU

10

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1

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10

9

7

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11

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Asset Base





WOL / Acid Plant


Social Investments

AGENDA

DRC Power Project


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2018 OPERATIONS OVERVIEWOVERVIEW

• Copper cathode production increased to 152,358 tonnes in 2018 from 2,196 tonnes in 2017.

• Cobalt contained in hydroxide produced increased to 11,112 tonnes in 2018

• Cobalt export and sales in were suspended in November, 2018 due to the presence of uranium detected in the cobalt hydroxide

• During Q4 2018, the final components of phase 2 of the WOL Project, being the remaining counter-current decantation (“CCD”) circuit and the electro-winning tank house (“EW”) were commissioned

• Acid Plant, earthworks were completed, civil works are progressing and orders for major long lead items continue to arrive on site. Commissioning of the Acid Plant is expected to commence in Q4 2019

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Asset Base





WOL / Acid Plant


Social Investments

AGENDA

DRC Power Project


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2018 PRODUCTION OVERVIEW

• In 2018, TMM was 60,779,732 tonnes, which included 55,981,685 tonnes of waste mined, and 4,952,814 tonnes of primary ore mined

• This represented a 33% increase in TMM from 2017

TOTAL MATERIAL MOVED (TMM): KOV & MASHAMBA EAST OPEN PIT

10,007

25,144

44,627

60,780

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

-

5,000

10,000

15,000

20,000

25,000

Q1 Q2 Q3 Q4

Cum

ulative TMM

('000)TM

M ('

000)

KOV TMM Actual Mashamba TMM Actual Cumulative TMM Actual

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2018 PRODUCTION OVERVIEW

• Primary ore mined in open pit operations was 4,952,814 tonnes in 2018

• Ore mined in 2018 had an average copper grade of 3.50%, and cobalt grade of 0.45%

TOTAL PRIMARY ORE MINED: KOV & MASHAMBA EAST OPEN PIT

495

1,712

3,459

4,953

-

1,000

2,000

3,000

4,000

5,000

6,000

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

Q1 Q2 Q3 Q4

Cum

ulative Primary O

re Tonnes ('000)Pr

imar

y O

re T

onne

s ('

000)

KOV Primary Ore Actual Mashamba Primary Ore Actual Cumulative Primary Ore Actual

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Asset Base





WOL / Acid Plant


Social Investments

AGENDA

DRC Power Project


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2018 PROCESSING OVERVIEW2018 PRODUCTION RAMP-UP

2015** 2018

Ore Milled (t’000)* 5,455 7,530 +38%

Copper Recovery (%) 68% 86% +18%

Copper Produced (t) 106,816 (pre restatement) 152,358 +43%

Cobalt Produced (t) 2,901 11,112 +283%

- 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000

- 2,000 4,000 6,000 8,000

10,000 12,000 14,000 16,000 18,000 20,000

JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

Co

Met

al (t

)

Cu

Met

al (t

)

2018 PRODUCTION RAMP-UP

COPPER COBALT

*Includes KITD Processing** 2015 represents the last year of full production prior to operations being placed on care & maintenance

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OPEN PIT MILLING TONNES

KITD MILLING TONNES

2018 PROCESSING OVERVIEW

TOTAL OXIDE LEACHED TONNES

4,865,090 152,358

COPPER TONNESPRODUCED 2018

11,112

COBALT TONNESPRODUCED 2018

4,703,020 2,483,170343,406ACTUAL ACTUAL

KTO MILLINGTONNES

ACTUAL

ACTUAL ACTUAL ACTUAL

+548,756ABOVE BUDGET

+2,358ABOVE BUDGET

+109ABOVE BUDGET

+511,786

ABOVE BUDGET

-1.32m

BELOW BUDGET

KTC

LUILU

+343,406

ABOVE BUDGET *

*KTO Underground operations were not budgeted to startup in 2018

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Asset Base





WOL / Acid Plant


Social Investments

AGENDA

DRC Power Project


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2018 FINANCIAL OVERVIEW

CAPITAL EXPENDITURE

OPEX Variance

Q4 2018 vs Q4 2017 +$266.6 million

Q3 2018 vs Q3 2017 +$279.3 million

Q2 2018 vs Q2 2017 +$143.5 million

Q1 2018 vs Q1 2017 +$110.5 million

YTD 2018 + $ 799.9 million

Major Expansionary Spend Spend

WOL Project $138.3 million

Acid Plant $41.8 million

Cobalt Projects $25.4 million

$397M2018 CAPITAL EXPENDITURE

2018 OPEX VS. 2017 OPEX 2018 EBITDA

Total EBIDTA

$215M+$799.9M*

*The increase in year over year opex was due to the ramp up of mining and processing activities

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Asset Base





WOL / Acid Plant


Social Investments

AGENDA

DRC Power Project


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REGULATORY UPDATE

• On December 18, 2018, Katanga announced that the Ontario Securities Commission (the “OSC”) approved a global settlement agreement between staff of the OSC and the Company, and certain of its former directors and officers relating to the investigation by staff into certain of the Company's historical disclosures.

• As a term of the settlement, the Company agreed to retain an independent consultant to complete a review of the policies, procedures and effectiveness of: (a) the Company’s metal accounting with respect to reporting of copper and cobalt metal production; and (b) the Company’s financial accounting with respect to the integration of production statistics, including the calculation of cost of sales and inventory values.

• On February 1, 2019, in accordance with the timetable in the OSC settlement agreement, Katanga presented to the OSC Staff the qualification documents in respect of a proposed consultant contemplated by the Settlement Agreement. These were subsequently approved by OSC Staff and on March 7, 2019, PricewaterhouseCoopers LLP (PWC) was retained.

• The Company started working with PWC and a site visit is scheduled end of May 2019.

OVERVIEW

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Asset Base





WOL / Acid Plant


Social Investments

AGENDA

DRC Power Project


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WOL PROJECTWOL PROGRESS: 2016 TO 2018

January 2016

November 2018

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WOL PROJECTMAIN COMMISSIONING ACTIVITIES IN 2018

Description Target Actual

Low Grade Solvent Extraction Jan 2018 5 Jan 2018

CM5 Oxide Mill Jan 2018 28 Jan 2018

Electrowinning 2 Feb 2018 18 Jan 2018

Co Plant Mar 2018 1 Mar 2018

Sulfide Roaster June 2018 31 May 2018

WOL Train 1 Aug 2018 10 Aug 2018

High Grade Solvent Extraction 2 Aug 2018 9 Aug 2018

CCD Train 1 Sept 2018 14 Sept 2018

CM6 Oxide Mill Oct 2018 28 Oct 2018

CM7 Oxide Mill Nov 2018 7 Dec 2018

Electrowinning 4 Dec 2018 10 Nov 2018

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ACID PLANTEXECUTIVE SUMMARY

SCHEDULE

H2SO4 Production Phase0 LTI

REPORTED FOR THE PROJECT, TO DATE

SAFETY

84% DBI’s overall engineering status completion

86% SENET’s overall engineering & design completion

E&I Tender due to be submitted & adjudicated

LOGISTICS

IS CLOSELY MONITORED

CONSTRUCTION

Bulk Earthworks

Completed, with several ancillary earthworks to be executed during

the civil construction phase

Civil Construction

In Progress; Political risk and rain delays negatively impacted

progress

SMPP Work

Started on the convertor and first Sulphur storage building

RISK MANAGEMENT

Expediting materials to poses problems; there’s significant build of vehicles at the borders, and there’s low availability of trucks for transportation from SA to Kolwezi

EXPEDITING MATERIALS1

The civil process is being impacted by the layered tie-in of SENET and DBI areas of responsibility

CIVILS PROCESS2

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ACID PLANTPHASE 1 PHASE 2 PHASE 3

H2SO4 Production

Utilize proven industry standard catalytic

conversion process from solid sulphur

Liquid SO2 Production

To be utilized within the Luilu Refinery

Steam Turbine Generator

Utilize residual heat for site power generation

c. 275m

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WOL / Acid Plant


Social Investments

AGENDA

DRC Power Project


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SOCIO-ECONOMIC CONTRIBUTIONS

Our People• 4,459 employees and 4,937 contractors in 2018

• $142 million on salaries and $5 million on health

• Focus on training and capacity-building programs

Procurement• A significant portion of our spending on Socio-Economic Contributions for procurement

is allocated to local suppliers and contractors

Governance • Policies and procedures align to the highest mining industry standards

• The company endorses the EITI (Extractive Industries Transparency Initiative) and the Voluntary Principles on Security and Human Rights

Community Development • $6 million investment in surrounding communities in 2018

• Focus on 4 areas: Health, Livelihoods, Education, Infrastructure

• Our community strategy is aligned to National Program for socio-economic development

OVERVIEW

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Asset Base





WOL / Acid Plant


Social Investments

AGENDA

DRC Power Project


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SOCIAL INVESTMENTS

• KCC’s support to the health sector via the donation of prescription drugs for the Mwangeji Reference General Hospital and the reference health centers of the Manika and Dilalahealth zones

• The aim of this intervention is to improve access to quality health care and assist local health zones with supplies

• On a periodic basis, KCC community officers conduct checks to ensure that the prescription drugs supplied are managed properly

HEALTH

Handover ceremony with the Provincial Minister of Health and the Head of the

Provincial Health Division

Annual Prescription Dugs Donation

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SOCIAL INVESTMENTS

• On an annual basis KCC, along with MUMI, organizes a farmers’ market to promote the great work done with local farming cooperatives

• A representation of supported cooperatives took part in the event, by presenting products in various sectors such as food and vegetable farming, livestock farming, fish farming, agricultural processing, sewing, carpentry, painting, etc.

• KCC and MUMI employees, Kolwezi residents and members of local authorities attended the event

COMMUNITY DEVELOPMENT

A cooperative’s stand at the market with transformation products

Sixth Edition of Farmers’ Market

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SOCIAL INVESTMENTS

• Completion of plowing and sowing activities for the 744 hectares, planned for this year campaign

• 62 associations, whose members and their dependents are estimated at 5,580 people benefit from this work

• Harvested maize is processed into flour for human consumption and for livestock feed

• COOPSY delivered 9,908kg of vegetables in 2018 Q4 to Bush Camp (40% of demand)


Contractor plowing the fields

2018 to 2019 Crops Campaign

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SOCIAL INVESTMENTS

• 250 community members attended the program

• The program was designed based on communities’ interests and request to improve knowledge on environmental obligations and performance of mining companies

• Upon completion of the program, community representatives acquired information on the new mining code provisions and companies’ obligations towards communities

• SRK was the chosen consultant for the design of the program


One of the informative sessions

Environmental Informative Sessions for Community Representatives

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SOCIAL INVESTMENTS

• KCC organized training sessions on leadership and conflict management to improve skills of community committees, which are the primary interface between the company and the communities

• This training was designed for the 120 committee members who work closely with the community liaison officers

• The program helped them improve their leadership skills and also manage different stakes within their communities


One of the training sessions

Training of Community Committees

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SOCIAL INVESTMENTS

• KCC supported secondary and academic training sector by donating high-performance computing equipment for the ISTA / Kolwezi computer lab and the Umoja High School computer room


Donations

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SOCIAL INVESTMENTS

• Reportage on donation of computer kits to ISTA (Technical School for Applied Sciences)

• Reportage on Farmer's Market

• Reportage on Community’s Environmental Informative Sessions

• Reportage on ceremony of prescription drugs donation to health authorities

• Press release on dangers linked to intrusions onto the KCC concession by artisanal miners

• Reportage on training of community members on leadership and conflict management


Reporting & Radio Messages on Local Media

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Asset Base





WOL / Acid Plant


Social Investments

AGENDA

DRC Power Project


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DRC POWER PROJECTSUMMARY

Turbine G27 – Jan 2018

SCOPE SCHEDULEThe scope is to supply KCC, MUMI and Partners with 450MW of reliable power:

• Repair turbines G27 and G28 at Inga 2

• Upgrade 2 convertors at Inga and Kolwezi to 500MW each

• Upgrade/maintain 2 lines from Inga to 500MW each

• Upgrade control and switching systems

• Provide new power line from Tenke to Kayavie

The current schedule is:

• G27 commissioned and on partial load (under testing)

• G28 will be on load in Q4 2019, 22 months from 15 Jan 2018

• Convertor 1 upgrade completed in Q3 2018

• Convertor 2 upgrade currently underway with completion in Q1 2019

• Power line upgrades done & Maintenance ongoing

• Control and switching systems will be complete end of 2019

• Power line from Tenke to Kayavie complete

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Q&A AND CONTACTSFUNDING, RISKS & MITIGATION

FUNDING*

MITIGATION

• SNEL is supplying current demand from DRC infrastructure and intermittent import option with Zambia is still open should there be a shortfall caused by delayed commissioning activities

RISKS

• Political risk due to election is currently impacting our ability to complete commissioning of Converter upgrade

• Corporate travel restrictions to the DRC

*Capital recovered and interest earned include December estimates

Description AmountTotal Project Budget $ 472 million Total Funded to Project at Dec 2018 $ 424 million Total Expenditure to Dec 2018 $ 416 millionTotal Capital Recovered at Dec 2018 $ 49 million (+$ 1 million) Total Interest Earned at Dec 2018 $ 56 million (+$ 5 million)

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THANK YOUQ&A AND CONTACTS

CONTACT DETAILS

TEL +41 41 766 71 10

FAX +41 41 766 71 18

E-MAIL [email protected]

WEBSITE www.katangamining.com

katanga mining limited 2019 annual general …/media/files/k/katanga-mining-v2/...(including but not...

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