|
Article Excerpt
OPERATOR: Good morning, everyone. Welcome to this conference call to discuss the third-quarter 2008 financial and operating results of Anvil Mining Ltd. announced this morning, November 13, 2008. Today's call is being recorded. We will also conduct a question-and-answer session. (Operator Instructions). At this time I would like to turn the call over to the Vice President Corporate Affairs for Anvil Mining, Mr. Robert La Valliere.
ROBERT LA VALLIERE, VP, IR, ANVIL MINING LIMITED: Thank you, operator, and good morning and thank you, too, for joining us. With me today are Bill Turner, President and CEO; Craig Munro, Senior Vice President Corporate and CFO; and Toby Bradbury, Vice President Operations, DRC.
Today's call is being webcast on CNW Group website and will be available for free broadcast for a period of seven days following the completion of this call. The full third-quarter and Q3 MD&A and unaudited financial tables and notes along with the notes are available on our website at www.AnvilMining.com on the Investor Relations section or on the SEDAR website at www.SEDAR.com.
Before we begin I would like to draw your attention to the fact that some of the matters to be discussed in today's call with respect to the future company performance will be forward-looking statements within the meaning of applicable law. We refer you to our Q3 2008 MD&A filed today on SEDAR and our website and our 2007 annual report and annual information form filed last March 2008 with the Canadian and Australian securities authorities concerning factors that could cause results to be different than contemplated in today's discussion.
A Q&A session will follow immediately after the remarks of the President and CFO and also Toby and the operator will start again the instructions for the Q&A session. At this time I would like to turn the call over to Bill Turner. Bill?
BILL TURNER, PRESIDENT, CEO, ANVIL MINING LIMITED: Thank you, Robert, and good morning, everybody. Quarter three 2008 has been a disappointing quarter for Anvil due to lower realized copper and silver prices, some technical issues at the operations resulting in higher operating costs, and higher G&A costs due largely to costs associated with a placement that did not proceed -- and in addition to that, $13.7 million of one-off adjustments.
The metal prices have, compared with the previous corresponding period, metal -- copper price has come down some 18%. We have had lower production compared with the previous corresponding period of about 18%. We have also had about a 44% decrease in sales, down to $42.3 million, and resulting in a net loss of $17.3 million or $0.24 per share. And this number has been significantly impacted by the one-off items.
The operational issues at Dikulushi, Kinsevere and Mutoshi mines include at Dikulushi the change in the underground mining method to an Avoca cut and fill method which has meant that we have not been drawing as much ore as we had anticipated from underground and we have been reprocessing lower grade stockpile material that has pushed our production levels down and increased our operating costs. That work is expected to be back on track at the beginning of next year.
At Kinsevere Stage I, the electric arc furnace, the first furnace was commissioned in August and produced its first black copper on the 1st of August, but it is taking time to ramp this up. We expect that to be ramped up in the first quarter of next year to producing the first electric arc furnace to be producing a [design] capacity of about 1,000 tons of copper per month.
Mining activities at Mutoshi were suspended in September for anticipated reasons. The material -- as we have moved further downstream with our mining the material has become a lot finer, it has become lower grade as well, and that material is not ideal for processing through an HMS plant. I think as we have stated before, we have an SX-EW study underway which is due for completion in the coming months and the project is really one that needs to move into an SX-EW operation.
The Kinsevere Stage II project, we are pulling back on that now and Toby will talk to that in a little bit more detail. The project has been -- the construction work has been going quite well. Our spend to date has been $136 million with commitments of $56 million for a total of $192 million spent and committed. The total project cost of course is $380 million.
The Company has recently concluded its negotiations with Gecamines and the DRC government for all of the Company's projects in the Congo with the Kinsevere d'amodiation agreement, the Mutoshi joint venture agreement and the Dikulushi mining convention. We have come to a satisfactory position with the government on these agreements and the documentation for these is currently in [Conchessa] with the government and we expect that these documents will be signed off during this quarter, we are not sure when exactly, but we feel from now on it's really just a matter of process and formality and we hope that that documentation will be completed as soon as possible.
The Company has been seriously affected recently by global economic conditions, particularly with respect to commodity prices. As you've all seen, the copper price is now down around $1.60. In July the price was around $3.80, so it's really come off very, very significantly. And the silver price is about half, the silver price now is just over $9.00, back in July it was around $18. So this has had a very serious impact on the profitability of our operations.
As I mentioned, the mining review has had an impact on us too in a number of areas. There is also conflict in the eastern part of the country which is although it doesn't have a direct impact on our activities in the Katanga Province, it does create a cloud over the whole country and impacts the investment climate in the country.
The operational difficulties I referred to with the lower feed grades at Dikulushi as a result of the redevelopment work that we're involved in, we have been pulling some ore out from underground, but we will not get to where we need to be until January or February next year and that combined with higher fuel costs has increased our cash operating costs there.
The delay in achieving design capacity with the electric arc furnace at Kinsevere has been an issue and there have been some overall increases in operating costs that have impacted us.
The illiquid markets are quite a problem; we need additional funding to finish off Kinsevere Stage II. Debt and equity markets are extremely difficult and that is putting up some hurdles for us in terms of securing our additional funding.
Our strategy for the next six to 12 months is to maintain, be sure that we can maintain a minimum cash balance required to support the Company's operations, to finalize the tentative or the interim...
|
