This was the decision by an independent committee established in July to review the company’s strategic options, following an unsolicited take-over bid which has since been withdrawn.

Katanga has signed the one-year loan facility with Glencore International AG (Glencore). Additionally, Katanga and Glencore have agreed to a 10-year off-take contract under which Glencore will buy 100% of annual copper and cobalt production at market terms.

“This loan from Glencore means that the next phase of our development is fully financed,” says Katanga chairman, president and CEO Arthur Ditto, “and we look forward to producing copper this year.”

Katanga’s initial focus is to succeed in bringing its major DRC copper-cobalt mine complex back into production. This is on track – copper production is scheduled to begin in December 2007, and full production is due in 2011, following completion of the rehabilitation of the brownfield site.

The company’s plan involves four-phase rehabilitation over a period of four years. Once fully operational, the mine will produce 150 000 tonnes of copper and 8 000 tonnes of cobalt a year. Total operational cost per pound of copper over the life of the project is predicted to be US$0.20 – among the lowest in the world.

The mine complex – which is approximately 300 km northwest of Lubumbashi, the DRC’s second city – includes both open pit and underground operations. It comprises the Kamoto underground mine and the open pit mines of Dikuluwe, Mashamba East and Mashamba West (together known as DIMA), as well as Musonoie-T17. Ore will be processed in the Kamoto concentrator and refined in the Luilu metallurgical plant. The mine site covers an area of over 15 000 hectares.

Latest studies indicate that total reserves and resources (excluding inferred) stand at 162 million tonnes of ore at 3.5% copper and 0.38% cobalt, which equates to 12.5 billion pounds of copper and 1.35 billion pounds of cobalt.

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Part of the preparations for the
revival of Kamoto – the re-built
road between Kamoto
and Luilu

USE OF EXISTING FACILITIES WILL CUT COSTS
To reduce pre-production costs and accelerate cash flow, the early phases will make maximum use of existing processing facilities and mining development. Subsequent expansions will continue to retro-fit and upgrade the existing facilities, while at the same time introducing new technology.

Stage one of the rehabilitation began in July 2006 when the company took over the site. This phase comprises general maintenance and refurbishment of the underground mine, concentrator and refinery. New tailings facilities will be constructed for the concentrator and metallurgical plant. The underground mine began operation in April 2007 and 70 000 tonnes of ore have been mined so far. Production is scheduled to ramp up to 60 000 tonnes per month by the end of 2007.

Mining in the open pit oxide mines is underway – blasting began in September at the Musonoie-T17 open pit, and the first ore has been extracted. Over 1.3 million tonnes of waste has been moved in pre-stripping. A start was made at the Musonoie-T17 pit because the other open pit mines are flooded and need to be dewatered. It will take around three years to dewater the Mashamba East pit and prepare it for production. The Dikuluwe and Mashamba West pits will be drained over a longer period.

The Kamoto concentrator started up in July. The sulphide circuit is now fully operational, and work has switched to the oxide circuit, where commissioning is in progress on the oxide mill and flotation cells. This section is scheduled to be fully operational this November, and in total two mills and 88 flotation cells are being re-furbished for Phase 1. Work on the two new tailings areas for the concentrator and metallurgical plant is progressing.

Commissioning of the Luilu metallurgical plant has started and will continue through November. The concentrate receiving area is now fully operational, and dry concentrate is currently being stockpiled. The leach agitators are being installed and construction of nine replacement tanks is close to completion. Brickwork and insulation is being completed on one of the two existing roasters, which was due to be fired for the first time as we went to press. The 54 copper electro-winning cells required for Phase 1 are structurally complete, with bus-bars in place. First copper is due to be shipped in December 2007.

Production during stage one will last until the end of 2008, employing two 100- tonne-per-hour grinding mills. Each subsequent phase of development will add an additional mill to the sulphide milling circuit, and in stage three the second mill in the oxide circuit will be refurbished, doubling oxide milling capacity.

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The steel structure at the Luilu
thickener being checked
after cleaning

PRELIMINARY WORK BEGINS ON PHASE TWO
Meanwhile preliminary engineering and planning has begun for Phase 2 for the rehabilitation programme to ensure a smooth transition from Phase 1. This includes engineering design work and the development of initial procurement lists. For the new roaster in Phase 2, procurement packages have been identified and tenders are currently being received for material and work.

Civil site-works for the new roaster are scheduled to begin in November 2007.

Stage two of the rehabilitation will begin in 2008 and will take approximately a year to complete. By the end of stage two, a new roaster in the refinery will increase output and reduce environmental emissions. Stage three rehabilitation begins in 2009, and production will again increase with the addition of a second new roaster. The final stage of rehabilitation commences in 2010 and will position the mine to reach sustained annual production of 150 000 tonnes of copper and approximately 8 000 tonnes of cobalt by 2011, with costs that will be among the lowest in the world.

Looking further ahead, Katanga believes there is more significant value to be released in the company. It intends to focus on increasing production capacity through expansion, efficiency improvements and technology upgrades, including the conversion of the cobalt circuit to the solvent extraction method.

It also foresees excellent opportunities for the further conversion of resources to reserves, and significant potential for new discoveries from a focused exploration programme on its large concession.

In the medium to long term, Katanga intends examining other opportunities to consolidate its position further as one of the world’s leading copper companies, including use of the mine complex as a springboard to further opportunities in the region.