Katanga Mining Ltd Ord KATFF

Gécamines capital deficiency and Gertler royalty

[Gws0623]

This weeks settlements are closely related:

As per the terms of the original KCC JV Agreement between Katanga, Gecamines and KCC (all publicly available), Gecamines has a “Replacement Reserves” obligation which requires it to deliver 4m tonnes of copper reserves and 200,000 tonnes of cobalt to KCC. If it doesn’t, under the terms of the agreement, Gecamines needs to pay $285 million to compensate KCC. If it is not able to do that, the JV Agreement requires the repayment to be made by way of set-off of the royalty, ie KCC will withhold the royalty until that debt has been paid. In short, the royalty that Fleurette paid for will not be paid to Fleurette from 1st March (assuming KCC is back in operation and paying royalties), but will be used to cover off a pre-existing Gecamines debt.