18th Mar 2015 12:39
LONDON (Alliance News) - Weatherly International PLC Wednesday said it is continuing discussions to resolve the "uncertainty" surrounding its financial position with its lender to get its shares back trading on the AIM market, but said production, and therefore revenue from its mines in the first two months of 2015, have been hit further, adding to the company's current predicament.
The miner said its future financial performance is contingent on revenue from the sale of copper from its mines, but this revenue has been hit by the production shortfall, as well as by a further downturn in copper prices in 2015. As a result, Weatherly said Wednesday, it is talking to lender Orion Mine Finance about the lower-than-expected production.
In February, Weatherly shares were suspended, and remain so, until it can remove the "uncertainty" from its current financial position, partially caused by the problems at Tschudi.
In January, Weatherly said its operations had become "unsustainable" in the current environment and reported a quarter-on-quarter fall in production after recovery rates and grades fell.
The Tschudi mine, which began producing copper cathode in February, produced less than expected in recent months due to slower leach rates and also had higher than anticipated acid consumption, Weatherly said Wednesday.
"The company has revised its short-term copper production schedule to take into account the impact of the lower initial production and has discussed this with Orion Mine Finance. It is currently anticipated that as a consequence Tschudi will reach its design capacity in the fourth quarter of 2015. Further work is underway by the company to verify the assumptions behind the revised copper production schedule," Weatherly said.
The company said it also is planning on updating the resource estimate for the project in the third quarter of 2015.
In January, the company also said the Otjihase mine has been experiencing ground control issues and was closed and abandoned.
"This, combined with other production shortcomings at Matchless resulted in both January and February being low production months. New areas have since become available and productivity has increased in the second half of February," said the company.
In addition, the company said that copper prices have taken a further downturn during the first quarter of 2015, falling to a low of USD5,300 per tonne at the end of January from USD6,000 per tonne at the end of December.
"While low copper prices exacerbated the impact of the poor production in January and February, central operation's losses for the current quarter are expected to be within the company's available working capital," said Weatherly.
It said assuming copper prices do not deteriorate any further, the company will be cash-flow neutral from now on as the issues are resolved.
"Weatherly's future financial performance is contingent on revenues received from the sale of copper, and the company is exposed to fluctuations in the copper price," said the company.
It said the loan facility from Orion may not be sufficient for all of its capital needs and said discussions with Orion are continuing.
"As a consequence, the company's financial position remains uncertain and the trading in the company's shares on AIM remain suspended pending further announcements," Weatherly said.
By Joshua Warner; [email protected]; @JoshAlliance
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