London, England — MININGREVIEW.COM — 19 December 2008 – Katanga Mining Limited – the company that is re-starting the Democratic Republic of Congo’s largest underground copper mine – says it may sell shares because it is struggling to survive amid plunging metal prices and dwindling cash reserves.
A news release issued here confirmed that Katanga would ask stockholders on 12 January to approve an almost 16-fold increase of its authorised share capital to 5 billion shares. The company said it was also considering taking a loan, convertible into stock, from some of its shareholders.
“Our cash reserves are sufficient – at current expenditure and operating levels – to fund continuing operations for a short period only,” Katanga said. “The company therefore requires additional funding on an urgent basis in order to permit it to continue to operate as a going concern.”
Katanga has suffered the effects of a rout in metal prices caused by a global economic recession. Copper futures have tumbled 54% this year on the Comex division of the New York Mercantile Exchange.
The company – whose shareholders include Glencore International AG, the world’s largest commodity trader – needs cash to complete the refurbishment of its Kamoto copper and cobalt mine in the DRC’s southern Katanga province.
The company’s shares on the Toronto Stock Exchange have dropped 98% this year.
In another development, Katanga announced that chief financial officer Stephen Jones had resigned last week, and that he would be replaced by Nicholas Brodie, but the company gave no reason why Jones had quit.
The company had planned to boost output to 300 000 metric tonnes of copper and 30 000 tonnes of cobalt by 2011. It said in August that copper output this year would be 27 500 tonnes and cobalt production would be 2 700 tonnes – lower than its initial forecast of 33 500 tonnes and 2 900 tonnes respectively. Katanga stopped mining its Tilwezembe open pit and halted the processing of ore through its Kolwezi concentrator last month because of low metal prices.