• Mawson West Says Kapulo Commissioning Progressing Well 0 comments
    Nov 14, 2014 11:48 AM | about stocks: MWSWF

    Mawson West (TSE:MWE) said that despite a challenging third quarter at its Dikulushi mine in the Democratic Republic of Congo, plant commissioning at its Kapulo project is well underway, with the first ball mill completing its initial run.

    The company continued construction at Kapulo during the quarter, and reduced capital costs by about US$14 million. It has spent a total of $96 million on the project so far, and is now projecting a revised total construction cost of about $110 million.

    The costs were reduced due to scope modifications, productivity improvements and lower installation costs and construction efficiencies,Mawson West said.

    Ramp-up to nameplate capacity is expected to be reached in the first quarter of next year, targeting a production rate of approximately 20,000 tonnes of copper in concentrate annually.

    "We expect first ore to be processed in December 2014," said chief executive officer Bruce McFadzean.

    The update came in the company's third quarter results statement, which revealed lower year-over-year earnings, revenue and copper production.Mawson West has been working on transitioning its Dikulushi mine this past year from an open pit operation to underground mining to extend the mine life.

    Production from the mine for the quarter totaled 852 tonnes of copper in concentrate, and 44,954 ounces of silver, below expectations due to lower than anticipated grades of ore processed.

    The company has revised its 2014 production target downwards to 3,000 to 4,000 tonnes of copper in concentrate as a result, with cash costs expected in the range of $4.50 to $4.75 per pound. As at the end of September, it produced a total of 2,474 tonnes of copper in concentrate.

    "Production at Dikulushi was well below expectations for the quarter due to lower grades of ore processed arising from the underground cave interface with the open pit, which led to increased dilution," said the company's chief executive.

    "However, as mining progresses at depth, the impact of the open pit and underground interface is expected to reduce and as a result we expect grades to increase. Nonetheless we have revised our guidance in light of these results."

    The company, even with the trying quarter, spent some $1.0 million on exploration at Dikulushi during the period, targeting upgrades to the mineral resource via underground drilling. It said results so far support the current inferred mineral resource and provide the opportunity to convert to higher confidence categories at similar widths and grades.

    "Despite recent challenges, we see great opportunities at Dikulushi and the results of the recent underground drilling program which we announced on 4 November 2014 underpin this quality asset," added McFadzean.

    "We look forward to updating the market on further progress."

    In the third quarter, the company swung to a loss after income tax of $11.78 million, on revenue of $3.3 million. It posted cash costs of $5.38 per pound of copper produced, and at October end had a cash balance of US$12 million.

    Mawson West said that in light of having to ramp up two operations and the near term copper price outlook, it is in advanced negotiations with potential partners to improve its balance sheet.