MTX Metorex

 
TIDMMTX 
 
METOREX LIMITED 
 
                (Incorporated in the Republic of South Africa) 
 
                     (Registration number 1934/005478/06) 
 
                                 JSE code: MTX 
 
                              ISIN: ZAE000022745 
 
                              Issuer code: MEMTX 
 
                                  ("Metorex") 
 
Metorex announces the outcome of the Democratic Republic of the Congo ("DRC") 
License Review process relating to its Congolese subsidiary companies 
 
 1. INTRODUCTION 
 
Metorex, the diversified mining group listed on the JSE Limited, is pleased to 
inform its shareholders that it has concluded negotiations with the DRC 
authorities with respect to the title review process of its subsidiary 
companies. 
 
The companies have concluded final agreements with La G�n�rale des Carri�res et 
des Mines ("G�camines") and Societe des Developmente Industrial et Miniere du 
Congo ("Sodimico"), and have obtained final approval from the Government of the 
DRC with respect to the reviews of Ruashi Mining Sprl ("Ruashi Mining") as well 
as Miniere de Musoshi et Kinsenda ("MMK"). 
 
 2. RUASHI MINING 
 
The final agreement relating to Ruashi Mining entails the following: 
 
  * payment to G�camines of a mineral content fee of $4m, to be settled in 
    several tranches over the next three years; 
 
  * adjustment of the equity participation of G�camines and Ruashi Holdings 
    (Proprietary) Limited ("Ruashi Holdings") to 25%-75% respectively in Ruashi 
    Mining; and 
 
  * standardization of royalties on gross revenue at 2.5%. 
 
The salient commercial components resulting from the review process for Ruashi 
Mining are set out below: 
 
Commercial       Original Agreement           Revised Agreement 
Aspect 
 
Shareholding     Shareholding in Ruashi       Shareholdings allocated as to 
                 Mining was allocated as to   Ruashi Holdings - 75%, G�camines 
                 Ruashi Holdings - 80%,       - 25%. 
                 G�camines - 20%. 
 
Mineral Content  A mineral content fee        A final adjustment of the mineral 
Fee              payment of US$3million was   content fee payment of US$4 
                 paid to Gecamines on the     million is to be made to 
                 acquisition of the           G�camines of which US$2 million 
                 prospecting and future       is to be paid on signature of the 
                 mining rights to Sokoroshe   amendment to the Creation of 
                 I, Sokoroshe II and the      Ruashi Mining, a further US$1 
                 Musonoi Project deposits.    million 12 months later and a 
                                              final payment of US$1 million 12 
                                              months thereafter. 
 
Royalty          A royalty payable by Ruashi  A royalty of 2.5% on gross 
                 Mining to G�camines          revenue payable by Ruashi Mining 
                 calculated on gross revenue  to G�camines on ore treated from 
                 derived from the processing  both the stockpiles and open 
                 of stockpiles was calculated pits. 
                 at 2.5% and ore processed 
                 from the open pit orebodies 
                 at a rate of 0.5%. 
 
Various other non-commercial aspects relating to management, boards, continued 
social programmes and labour complements were included in the review, which 
remain largely unchanged from the previous arrangements. 
 
 3. MUSONOI PROJECT (Part of the Ruashi Mining Concession) 
 
An extensive drilling programme has been undertaken at the Musonoi Project 
situated in Kolwezi with encouraging copper and cobalt mineralization having 
been established. Evaluation work is being completed from an ore resource 
establishment, geo-technical evaluation, potential mining method and mine 
design and metallurgical testwork perspective. It is envisaged that a 
pre-feasibility will be completed during the forthcoming 12 month period. This 
project forms an integral part of the Ruashi Mining review process. 
 
 4. COPPER RESOURCES CORPORATION ("CRC") ANDMMK 
 
The agreement between Sodimico, CRC and Metorex, was approved by the DRC 
Government. This agreement confirms the following: 
 
  * the revised shareholding of 23% non- dilutable for Sodimico (up from 20%) 
    and 77% for CRC and Metorex (down from 80%). CRC was the only company 
    categorised in the "orange" category of the review process that was 
    modified from a 50-50 basic shareholding for the parastatal enterprises and 
    the joint venture partner respectively to the current final shareholding of 
    23-77% respectively; 
 
  * mineral content fee payments to Sodimico to the amount of $3 million over 
    several instalments spread over a 3 year period until 2011; and 
 
  * royalties payable by MMK to Sodimico to be standardized at 2.5% of gross 
    revenue. 
 
It was also agreed that the Musoshi Mine surface and underground infrastructure 
be returned by MMK to Sodomico together with certain equipment that had been 
transferred to Kinsenda Mine and remained unused. Compensation would be paid by 
MMK on a fair value basis for any equipment removed from Musoshi Mine to 
Kinsenda Mine that had been applied to the Kinsenda mining operations. 
 
The power supply to the Musoshi and Kinsenda Mines are channelled through the 
Kasumbalesa Substation. This substation will require upgrading on the 
development of the Kinsenda Mine for which MMK has undertaken to finance the 
upgrade and recover the cost thereof from Sodimico. This upgrade will only 
occur once the full scale development of the Kinsenda Mine has commenced. 
 
CRC is focused primarily on establishing a financing package for the 
development of the Kinsenda Mining Project, which has an established measured 
resource at grades of approximately 5% Copper. The life of mine is 
approximately 15 years at a milling rate of approximately 80 000 tons per 
month. 
 
In addition, approximately 13 000 metres of exploratory drilling was conducted 
in the Lubembe deposit during 2008. The results of this drilling are being 
evaluated and a scoping study and/or pre-feasibility study will be conducted 
during the next 12 months. 
 
The Kinsenda Mine has been dewatered to approximately Level 290 which is below 
the initially planned production levels. Dewatering and general care and 
maintenance will continue pending secured adequate financing for the 
development of the project. The metallurgical plant design has been completed 
by MDM and certain site establishment and civil work has been completed. Once 
the financing of up to US$200million has been secured, the project will be 
accelerated and could commence production of copper concentrate within a period 
of 18 months thereafter. 
 
 5. PROJECT DEVELOPMENT FOCUS AND PRIORITIES 
 
The Metorex Group is primarily focused on the ramp up of production at Ruashi 
Mining during this calendar year and the fine tuning and balancing of the 
metallurgical plant and open pit mining operations. In addition, a financing 
package is being sought for the development of the Kinsenda Mine which has the 
infrastructure, power, water, roads and underground development is existence. A 
copper concentrator construction is required to bring this operation into 
production. The pre-feasibility study on the Musonoi Project will take place 
during the next 12 months. Development of the Musonoi Project would occur 
subsequent to the commissioning of the Kinsenda Mine and the securing of 
suitable financing. 
 
Charles Needham, Group Managing Director of Metorex said, "Metorex is satisfied 
with the outcome of this protracted negotiation process.  We are one of the 
early companies out of sixty one under review to conclude negotiations and one 
of the few producing copper in the DRC at this time. We now look forward with 
certainty to the future for the Ruashi Mining project which boasts a state of 
the art processing facility. The continued production ramp up at the plant will 
realise value for shareholders. We are also seeking a suitable financing 
package for the continued development at Kinsenda Mine. Ruashi Holdings, CRC 
and Metorex have given up some equity participation in the subsidiaries, 
however shareholder development loan repayments have agreed preferential 
repayment terms." 
 
For further enquiries please contact: 
 
 
 
Metorex 
 
Charles Needham     Tel:   011-880 3155 
 
 
 
College Hill        Tel:   011-447 3030 
 
Jacques de Bie      Cell:  082-691 5384 
 
Hayley Crane 
 
Sponsor: 
 
BJM Corporate Finance (Pty) Limited 
 
Notes to Editors: 
 
  * The mineral content fee is a once off payment and a `doorway' to operate in 
    the DRC. In the case of Ruashi Mining sprl. The payment terms are 
    structured with an initial payment of $2m; $1m at the end of 2010 and a 
    final payment of $1m in 2011. This is in addition to the initial mineral 
    content fee paid prior to this review process [$3m] which includes the 
    Ruashi, Sokoroshe and Musonoi Project deposits. 
 
  * The 0.5% royalty which Ruashi Mining sprl was paying under the old 
    agreement on ore processed from the open pit has been standardised for both 
    the stockpiles and open pits. 
 
  * MMK and Ruashi are located in the south eastern part of the Katanga 
    Province, where the infrastructure, terrain and climatic conditions are 
    user friendly and conducive to relatively trouble free mining conditions. 
 
 
 
END 
 

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