Sunday, 22 September 2019 08:37 GMT

UPDATE - Weatherly to review two mines after copper price slide


Weatherly International (LON:WTI) is to review the future of its two currently operating mines in Namibia after the recent slide in the copper price.

The metal's price has dropped to below US$6000 per tonne in 2015 its lowest for five years on excess supply and fears Chinese demand is slowing.

Rod Webster chief executive said: "At current production levels and copper prices Central Operations are unsustainable and the board will review the situation going forward."

Central Operations comprise the Matchless and Otjihase mines but not the new development underway at Tschudi also in Namibia where first production is due in the second quarter. 

Copper production from the two Central mines declined by 17% in the three months to December quarter-on-quarter while costs rose to US$7209 per tonne (US$3.27lb).

Weatherly had cash reserves of approximately US$10.8mln at the end of December excluding draw downs under the Orion Mine Finance loan.

Charlie Long at broker Sanlam noted that the Central operations have been an important part of the Weatherly story notably in 2012 when the company generated $10.4mln of operating cashflow - mainly due to them.

Long added that now Tschudi is on track for first production in the second quarter of 2015.

"It is a much better quality operation than the Central Operations mines which are both small underground and mediocre grade" he said.

"Tschudi is being developed and will be run by a top class management team in all departments - mining crushing the heap leach the SX-EW plant..."

SP Angel highlighted that while Tschudi was able to generate FCF (free cash flow) at current copper prices producing 17000 tonnes per year at a forecast cost of US$4200 per tonne the company guidance of reaching 25000 tonnes including Central Operations in 2016 was likely to be revised.

Shares eased 25% to 1.65p.

UPDATE - Weatherly to review two mines after copper price slide

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