Update concerning Significant Events
Land Rights Negotiations with Gécamines
As outlined in Katanga's 43-101 Technical Report (the "43-101 Report") issued on
Since the issuance of the 43-101 Report and Q3 production results, these discussions between KCC and Gécamines with respect to the rights required for the construction of the new tailings facility have progressed and KCC is seeking to enter into a contract with Gécamines for these rights. The negotiations are ongoing but an agreement may occur as early as this month.
If KCC and Gécamines are able to reach an agreement on the requested land areas, the risks for KCC's operations resulting from land constraints, which are described in the 43-101 Report (and summarized on page 78 of the Prospectus) would be mitigated. However, there can be no guarantee that such an agreement will be concluded.
Restatement of Historical Financial Statements filed in 2017 and OSC Settlement
On
The Company has previously reported this year on the work undertaken by the Consultant and the Company including their joint development and submission to OSC Staff of a timetable for future action including further testing in Q1 2020 of process upgrades scheduled to be implemented by the end of 2019. The Company confirms that all required accounting systems upgrades are now fully or substantially implemented and expects the Consultant testing to proceed as scheduled in Q1 of 2020.
Fatalities of Illegal Artisanal Miners
The armed forces of the DRC (the "FADRC") remain in the area of the operations of KCC. Since this FADRC intervention, which is continuing, KCC has not become aware of any confirmed human rights violations and the illegal miners who had occupied the KCC site remain dispersed. KCC has continued to make significant efforts to upgrade additional perimeter controls with nearly 20km of new perimeter security fencing installed in H2 2019. Construction of these additional perimeter controls will continue into 2020.
New Directors and Executive Officers of the Company and KCC
The new management team of
Update on Major Projects
Cobalt Projects Update
Cobalt dryer #1 has now returned to operation at a reduced capacity, of around 60% of design, following the completion of temporary repairs. Dryer #2 remains offline for design modifications, with commissioning scheduled during Q1 2020, and reaching design capacity in Q2 2020. Once dryer #2 is operational, dryer #1 will be taken off-line for design upgrade. Dryer #1 is expected to then be back online and operating at full capacity in Q2 2020. Full drying capacity should therefore be achieved from the start of Q3 2020. Once full drying capacity is reached, KCC will be in a position to export all of its cobalt production, including a gradual drawdown of accumulated cobalt inventories.
The objective of the cobalt debottlenecking projects (the "Cobalt Projects") at KCC is to upgrade the existing cobalt plant design in order to reduce bottlenecks through modification of the precipitation, thickening, filtration, drying and bagging processes. This will align the design of the cobalt plant with the average life-of-mine cobalt production plan of 30,000 tonnes per annum. Execution of the Cobalt Projects at KCC is expected to continue throughout 2020, with the additional thickening capacity expected to come online during Q2 2020.
Acid Plant Update
The Sulphuric Acid production (Phase 1), Sulphur Dioxide production (Phase 2) and Steam Turbine Generator (Phase 3) project at KCC (the "Acid Plant"), continues to progress. Phase 1 engineering, procurement, fabrication and delivery and civil engineering is complete, with structural, mechanical, plate work, piping and electrical and instrumentation installation progressing. Overall project progress of Phase 1 (Sulphuric Acid production) is now more than 75% complete.
Commissioning of the Acid Plant remains scheduled to continue through H1 2020, with completion of Phases 2 and 3 in H2 2020. KCC has received applicable Environmental Impact Study approvals from the Directorate for the Protection of the Mining Environment.
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Forward Looking Statements
This press release may contain forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or describes a "goal", or variation of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will" be taken, occur or be achieved. This press release may contain forward-looking statements. Often, but not always, forward-looking statements can be identified by the use of words such as "plans", "expects", or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or describes a "goal", or variation of such words and phrases or state that certain 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 information available at the time the statements were made. Actual results or events may differ from those predicted in these forward-looking statements. All of the Company's forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements. The key assumptions that have been made in connection with the forward-looking statements include the following: that negotiations with Gécamines have progressed such that it may be possible that an agreement would be entered into that would resolve operational challenges resulting from land constraints at the KCC mine site; that the Company will complete the ramp up of full drying capacity as part of the Cobalt Projects in the time expected and realize the anticipated benefits of the Cobalt Projects; there being no significant disruptions affecting the operations of the Company whether due to legal disputes, judicial action, labour disruptions, supply disruptions, power disruptions, rollout of new equipment, damage to equipment or otherwise; permitting, development, operations, expansion and acquisitions at KCC being consistent with the Company's current expectations; the Company being able to confirm the margin and cash flow improvements identified by the comprehensive business review targeting mining efficiencies and processing improvements as well as enhancements to product quality realizations and overhead cost reductions announced on
Forward-looking statements involve known and unknown risks, future events, conditions, uncertainties and other factors which may cause the actual results, performance or achievements to be materially different from any future results, prediction, projection, forecast, performance or achievements expressed or implied by the forward-looking statements. Although Katanga has attempted to identify important factors that 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 as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. 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 statements whether as a result of new information, future events, or otherwise, except in accordance with applicable securities laws.
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