Weatherly International rapidly growing copper production towards targets

Weatherly International (LON:WTI) told investors that it is rapidly growing copper production towards its output targets in Namibia.

In today’s first quarter trading update it confirmed that teething problems with the start-ups at the Matchless and Otjihase mines - involving late delivery of key equipment and transport difficulties – have been exacerbated by extremely wet weather. 

Consequently the ramp-up process is about a month behind. Because of the delayed start Weatherly now expects annual production to be slightly lower than the group’s original target at 4,000 tonnes.

Weatherly has now produced 2,834 tonnes of copper concentrate from the mine - 2,797 tonnes of which have already been delivered to the Walvis Bay port storage facility, for shipment by commodities trader Louis Dreyfus.   

"I am pleased with the performance of the business in this quarter,” said chief executive Rod Webster. “Mine start-ups are never without problems and the team has done well in tackling them.”

“Most of the start-up difficulties have been resolved and, although refurbishment activities have taken longer than expected, we are now more confident that the stated targets can be achieved."

Weatherly said that production is building rapidly to the levels originally projected, which sees 45,000 tonnes of ore being blasted to produce 580 tonnes of copper each month. 

Once the operation reaches this point Weatherly expects cash costs will fall below US$4,000 per tonne.

The company emphasised that the mines remain ‘cash-flow’ positive, even at the current low rate of production, and the group continues to deliver into its hedges which totalled 3,375 tonnes of copper at the end of June, at an weighted average price of US$9,535 per tonne.

Weatherly confirmed that it will continue to maintain a 15-18 month forward position on copper sales.

Work is also progressing at the group’s other projects, the Tschudi and Tsumeb projects which are collectively referred to as the northern operations. 

In May, very promising preliminary metallurgical results were received for the Tschudi project, where a feasibility study is pencilled in for completion at the end of 2011. 

Weatherly said that column leaching test work indicated good recoveries from the oxide, mixed and sulphide ore types. The report provided a compelling case for a stand-alone heap leach processing operation. 

The group’s consultant, Sedgman Resources, is continuing studies based on a 'stand alone' 2 million tonne per annum open pit, utilising a heap leach/SX-EW process.  

A final investment decision will be made on Tschudi at the end of this year, once the feasibility work is in.

Meanwhile at Tsumeb a drilling campaign has recently been completed, and all assays have been completed but Weatherly is still awaiting the results of some independent quality control data. It said that a back-log at the South African labs has caused the quality control assessment to be delayed.

Weatherly confirmed that the drill results will form the basis of a new stand alone feasibility study for Tsumeb.