13th Oct 2015 08:26
LONDON (Alliance News) - Weatherly International PLC on Tuesday said it has begun commercial production at the Tschudi copper mine in Namibia, only a month after suspending its two other copper mines because of weak copper prices.
However, the Tschudi mine is producing more than was anticipated, and the company increased its 2015 production guidance.
The miner said production from the Tschudi mine continued to ramp-up "ahead of plan" in the first quarter of its financial year, producing 3,554 tonnes of copper cathode, 3% higher than the company's previous guidance, it said.
On October 1, Weatherly declared Tschudi as a commercial operation and current production levels are running at about 84% of the capacity of the plant at the mine.
Weatherly began mining at Tschudi in the quarter ended March 31, producing 772 tonnes of copper cathode over a six week period. In the following quarter ended June 30, this rose to 2,257 tonnes of copper cathode, showing a steady quarter-on-quarter rise since production began.
Tschudi is expected to reach its design capacity of 1,400 tonnes per month, or 4,200 tonnes per quarter in the second quarter due to end December 31, 2015.
"Having operated at in excess of 80% of design capacity for a full quarter, the company has now confirmed that commercial production status has been achieved at Tschudi and from October 1 onwards revenue and operating costs at Tschudi will no longer be capitalised. Consequently for the December quarter onwards, the company will commence providing appropriate operating cost details for Tschudi," said the company.
The better-than-expected production in the first quarter of the financial year has led the company to increase its production guidance for the 2015 calendar year to 10,400 tonnes of copper cathode from its previous guidance of 10,000 tonnes.
Weatherly continues to test the performance of the plant at the Tschudi mine, which has suggested the company could expand the plant's capacity to up to 20,000 tonnes of copper cathode per year, which would be just under double what the company is aiming to produce in 2015.
In order to reach that 20,000 tonne capacity, Weatherly will need to spend around USD1.4 million and it said it will "evaluate the opportunity in due course".
Before evaluating the possible expansion, it will update the reserve and resource statement for the Tschudi mine. To upgrade that capacity, Weatherly would need to upgrade the plant's infrastructure, which would raise production to between 17,000 to 20,000 tonnes per year.
Although the start of commercial production will be welcomed by investors, the company suspended copper production in September from its other two mines in Namibia, Otjihase and Matchless, because of low copper prices.
When it suspended the two mines, it said copper prices had hit a six-year low during 2015, leading to the two mines not being commercially viable.
However, Tschudi is a low-cost operation compared to the other two mines, leaving it as an economic operation even with current low copper prices.
On Tuesday, Weatherly said production remains suspended from the two other mines but said it has moved them into the project development phase to prepare the mines for future production of larger copper volumes, once market conditions improve.
Weatherly shares were down 3.3% to 0.580 pence per share on Tuesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
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