MIRA
INFORM REPORT
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Report Date : |
14.06.2007 |
IDENTIFICATION DETAILS
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Name : |
KANSANSHI MINING PLC |
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Registered Office : |
Kansanshi Mines, |
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Country : |
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Date of Incorporation : |
1999 |
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Com. Reg. No.: |
37529 |
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Legal Form : |
Private Limited Liability Company |
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Line of Business : |
Operators of an open pit copper-gold deposit in Kansanshi name Cu-Au,
near Solwezi in the Copperbelt. |
RATING & COMMENTS
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MIRA’s Rating : |
Ba |
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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Maximum Credit Limit : |
KWACHA 600,000,000 |
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Status : |
Satisfactory |
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Payment Behaviour : |
Regular |
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Litigation : |
Clear |
COmpany NAME
KANSANSHI MINING PLC
ADDRESS
Area : Kansanshi Mines
P.O. Box :
110385
Town : Solwezi
Province :
North Western
Country :
Telephone :
(260 2) 658 000
Fax : (260 2) 658 000
SENIOR COMPANY
PERSONNEL
Name Position
1. Philip K. R.
Pascall Group Chairman & Chief Executive Officer
2. Martin R. Rowley Chief
Financial Officer
3. Clive Newall President
4. Russel Alley Managing Director
5. Tebbie Sleming
(Mrs) Financial Manager
Total Employees
1,000
PAYMENTS
No complaints have been
heard regarding payments from local suppliers or banks.
Subject was established
in 1999 and engages in exploration of copper which commenced in the last
quarter of 2004. Commercial production started in April 2005.
Subject
is a subsidiary of First Quantum Minerals Ltd,
Ownership inspires
confidence and we consider it is acceptable to deal with subject for MEDIUM
amounts.
Opinion on maximum credit
: KWACHA 600,000,000 (higher amounts may be considered with assurances from the
parent company)
Trade risk assessment :
Opinion on the credit
figure of
The above figure is much
higher than normally seen in one amount, however could prove admissible in a
series of transactions provided the total indebtedness is strictly monitored.
TRADE REFERENCES
NAME :
SDV AMI ZAMBIA LTD
Street :
PO Box :
30131
Town :
Country :
Telephone : (260 92) 658 000
PRINCIPAL BANKERS
NAME :
STANDARD CHARTERED BANK ZAMBIA LIMITED
Branch :
Standard House,
PO Box :
32238
Town :
Telephone : (260 1) 228 216
Fax :
(260 1) 222 092
Acc. No. : 0240032021601
The Company also has an
account with other local banks, including The Stanbic Bank.
FINANCIAL INFORMATION
Balance sheets are not
available and the subject interviewed declined to give any financial
information, which the company regards as strictly confidential.
The
following consolidated financial statements include the accounts of the Parent
Company and all of its subsidiaries. The principal operating subsidiaries are
First Quantum Mining and Operations Limited (FQMO), Compagnie Minera De Sakania
SPRL (Comisa), Kansanshi Mining Plc (Kansanshi), Mauritanian Copper Mines SARL
(Guelb Moghrein), Frontier SPRL (Frontier), and Adastra Minerals Inc.
(Adastra).
2006 2005
(thousands of U.S. dollars) Assets Current assets
Cash and cash equivalents 249,544 82,910
Restricted cash 15,000 20,162
Accounts receivable 142,821 62,938
Inventory 147,374 60,854
Current portion of other assets 10,108 7,506
564,847 234,370
Investments 45,171 9,522
Property, plant and equipment 1,068,118 471,294
Other assets 66,287 31,325
1,744,423 746,511
Liabilities
Current liabilities
Accounts payable and
accrued liabilities 84,802 63,492
Current taxes payable 110,039 16,055
Current portion of long-term debt 57,713 58,255
Current portion of other liabilities 19,389 20,377
271,943 158,179
Long-term debt 237,203 176,767
Other liabilities 38,211 34,340
Future income tax liabilities 173,319 43,330
720,676 412,616
Minority interests 88,646 22,454
809,322 435,070
Shareholders’ equity
Equity accounts 396,017 166,592
Retained earnings 539,084 144,849
935,101 311,441
1,744,423 746,511
CONSOLIDATED STATEMENT OF
INCOME
Sales revenues
Copper 1,073,943 434,100
Gold 20,128 6,715
Acid 412 3,799
1,094,483 444,614
Cost of sales (264,600) (151,904)
Depletion and amortization (56,067) (36,545)
Operating profit 773,816 256,165
Other expenses/income
Exploration (18,889) (7,493)
General and administrative (19,182) (9,724)
Interest and financing fees
on long-term debt (32,729) (19,385)
Other expenses/income (57,416) (16,996)
Gain on disposal of investment 1,805 16,127
(126,411) (37,471)
Earnings before income taxes
and minority interests 647,405 218,694
Income taxes (166,845) (45,612)
Minority interests (66,174) (20,264)
Net earnings for the year 414,386 152,818
Retained earnings (deficit)
beginning of year 144,849 (3,936)
Dividends (20,151) (4,033)
Retained earnings end of year 539,084 144,849
Earnings per common share
Revenues :
US DLRS 51,342,000 - 2002 - exact
: US DLRS
60,454,000 - 2003 - exact
: US DLRS
113,523,000 - 2004 - exact
: US DLRS
444,614,000 - 2005 - exact
: US DLRS 1,073,943,000 - 2006 - exact
Loss for the period :
US DLRS (3,791,000)- 2002 - exact
: US DLRS
(31,479,000)- 2003 - exact
Profits : US DLRS 28,010,000
- 2004 - exact
: US DLRS
152,818,000 - 2005 - exact
: US DLRS
539,084,000 - 2006 - exact
Financial year ends 31
December.
LEGAL STATUS AND
HISTORY
Date Started : 1999
History
: Subject's exploration started in 1999. The construction and procurement
process began in earnest in September 2003. In June 2004, engineering and
design aspects of the project were complete. Major bulk earthworks were
generally completed. In November 2004 subject started commission stage and on
19 April 2005 subject commenced commercial production.
C.R. No. : 37529
Capital : not given
Private Limited Liability
Company with the following shareholders :
1. First Quantum Minerals
Ltd 80 %
8th Floor -
Tel: (1 604) 688 6577
Fax: (1 604) 688 3818
The
company is listed on the Toronto Stock Exchange (symbol FM) and the Alternative
Investment Market operated by the London Stock Exchange (symbol FQM). The
company is a member of the S&P/TSX Composite Index.
2. ZCCM Investment
Holding 20 %
Copperbelt Environment Project Investment
House
P.O
Telephone: (260 2) 245 054 / 245 025
Fax
: (260 2) 245 363 / 245 364
Parent Company
First
Quantum Minerals produces LME grade "A" copper cathode, copper in
concentrate, gold and sulphuric acid. The Company's operations in
First
Quantum Minerals Ltd is a rapidly growing integrated mining and metals company
whose principal activities include mineral development, mining, smelting and
refining. The Company is focused on the copper, cobalt and gold sectors in
Affiliated companies of
Kansanshi Mining PLC :
Associates
1. Compagnie Miniere de
Sakania (COMISA)
Democratic
Tel: (243) 814 000 051 / 9703 1133
Fax: (243) 234 2212
2. Guelb Moghrein (Guelb)
Copper-Gold Project
Northeast of Akjoujt,
3. Mopani Copper Mines
Plc
Nkana & Mufulira Mines
Central Avenue
Tele: (260 2) 247 000
4. Bwana Mkubwa Mining
Ltd
Tel: (260 2) 655 433 / 655 050
Fax: (260 2) 655 399
5. Frontier SPRL
Industrial Area
P.O. Box :
230022
Telephone:
(260 2) 650 993
Fax
: (269 2) 651 363
6. First Quantum Mining
& Operations Ltd
Telephone:
(260 1) 651 555 / 651 556 / 651 557 / 651 558
Fax
: (260 1) 651 555
7. Adastra Minerals Inc.
(Adastra)
ACTIVITIES
The Company is involved
in the following activities :
Operators
of an open pit copper-gold deposit in Kansanshi name Cu-Au, near Solwezi in the
Copperbelt. The Copperbelt is an arcuate zone 600 kilometres long by 50 kilometres
wide containing one of the world’s greatest concentrations of copper-cobalt
deposits. The arc of Copperbelt copper-cobalt deposits extends from
The
Kansanshi deposit has been defined in two areas, the Main Zone and the
Northwest Zone. It is one of the premier undeveloped copper-gold deposits in
the world. Copper production from Kansanshi is forecast to be 85,000 tonnes in
2005.
Subject's
plant treats 10 mtpa of ore through two separate oxide and sulphide processing
streams. Following conventional crushing and grinding, sulphide ore is directed
to flotation, thickening and filtration to produce saleable sulphide
concentrate, whilst the oxide ore is treated by leach, CCD, SX-EW stages to
produce copper cathode for sale.
On
19 April 2005, subject commenced commercial production for GAAP purposes. In determining
that commercial production had been reached for this purpose it was necessary
for both the oxide and sulphide circuit to have run at above 65% of original
design capacity continuously for a period of at least one week. During the
commissioning stage, 11 November 2004 - 19 April 2005, subject production
totaled 6,792 tonnes of copper in concentrate and 1,941 tonnes of finished
copper cathode.
Subject
expects a result in an average of 145,000 tonnes of finished copper production
per year during the period of 2006-2009.
Cash
costs for 2006 are forecast in the range of US DLRS 0.71 to US DLRS 0.77 per
pound of copper.
Project Highlights:
Key Data Phase One, Years
1-16 only (extracted from GRD Minproc DFS)
Mine Life - Phase
One 16 years
Strip Ratio 1.4 to 1
Throughput:
Oxide and Mixed ores 4.0
million tonnes/year (max)
Sulphide ores 2.1 - 6.0 million tonnes/year (range)
Ore Mined and
Processed 143 million tonnes
Waste Mined 199 million tonnes
Head Grades:
Copper 1.43 %
Gold 0.22 gram/tonne
Total Copper Cathode
Production 722,812 tonnes
Total Copper Production
in Concentrate
(paid) 912,525 tonnes
Total Gold Production
in Concentrate
(paid) 395,479 ounces
Total Copper
Recovery 80.0%
Cash Operating Costs
after gold credit US
DLRS 0.38 pound of copper
Imports from
FACILITIES
The Company has the
following facilities :
Administrative office,
processing plant and open pit copper-gold mine are located in Kansanshi, near
Solwezi in
In
November 2004, subject entered into a US DLRS 25 million cost over run facility
with Glencore International AG. The facility bears interest at LIBOR+3.5%. If
utilized, the loan is repayable in ten semi-annual instalments commencing
eighteen months after the project completion date.
RATING EXPLANATIONS
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RATING |
STATUS |
PROPOSED CREDIT LINE |
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>86 |
Aaa |
Possesses an extremely sound financial base with the strongest
capability for timely payment of interest and principal sums |
Unlimited |
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71-85 |
Aa |
Possesses adequate working capital. No caution needed for credit
transaction. It has above average (strong) capability for payment of interest
and principal sums |
Large |
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56-70 |
A |
Financial & operational base are regarded healthy. General
unfavourable factors will not cause fatal effect. Satisfactory capability for
payment of interest and principal sums |
Fairly Large |
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41-55 |
Ba |
Overall operation is considered normal. Capable to meet normal
commitments. |
Satisfactory |
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26-40 |
B |
Unfavourable & favourable factors carry similar weight in credit
consideration. Capability to overcome financial difficulties seems
comparatively below average/normal. |
Small |
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11-25 |
Ca |
Adverse factors are apparent. Repayment of interest and principal sums
in default or expected to be in default upon maturity |
Limited with
full security |
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<10 |
C |
Absolute credit risk exists. Caution needed to be exercised |
Credit not
recommended |
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NR |
In view of the lack of information, we have no basis upon which to
recommend credit dealings |
No Rating |
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This score serves as a reference to assess SC’s credit risk
and to set the amount of credit to be extended. It is calculated from a
composite of weighted scores obtained from each of the major sections of this
report. The assessed factors and their relative weights (as indicated through
%) are as follows:
Financial
condition (40%) Ownership
background (20%) Payment
record (10%)
Credit history
(10%) Market trend
(10%) Operational
size (10%)