Central African Mining and Exploration Co (CAMECO), the AIM company focussed on Africa, has announced its preliminary results for the year ended 31 March 2007. Chairman, Phil Edmonds, said "I am very pleased to report another year of exceptional development for CAMEC. This has been a transformational year where we have rapidly expanded and built on our position as a pan-African fully integrated exploration, mining and production company. We have achieved strong revenue growth for the period with a turnover of £69.5 million (2006: £11.0 million) and that the significant investment in our flagship Luita SX/EW facility is starting to reap dividends, as it is now producing both copper cathode and cobalt concentrate. Acquisitions, including BOSS Mining and SABOT, have been instrumental in our growth and in this vein we are now making a full offer for Canadian listed Katanga Mining, which again has the potential to dramatically enhance our position, by building the company into one of the leading producers of copper in the Democratic Republic of the Congo (DRC) and potentially the world’s largest producer of cobalt.
"Operationally, much of our focus has been related to the Luita SX/EW plant, which is now contributing to revenues. The strategy has been to focus on the rapid development of production, rather than near term profitability. As a result the plant has been designed on a modular basis to expedite production, allowing us to take immediate and growing advantage, as modules are added, of the present high metal prices. The Luita plant is in the process of being completed on schedule and within budget. In addition, its modular design and the reinvestment of early stage cash flow means that the plant is fully funded from existing CAMEC resources and operating cash flow. The project development is on track to achieve our targets of annual production capacity of 40,000 t of copper and 6,000 t of cobalt by end of March 2008 and 100,000 t copper and 12,000 t cobalt by December 2008.
"We are aggressively pursuing development programmes at our fluorspar and coal projects in South Africa while our investment in the Pfula platinum project, on the Bushveld complex in South Africa and alongside Impala Platinum, gives us a significant attributable platinum resource base. In Mozambique we continue to develop our coal and agricultural operations. Notably, there now seems to be a global interest in Mozambique coal, as highlighted by recent merger and acquisition activity, while the market at large is also starting to focus on agricultural operations. In Mali, we are advancing our bauxite licence areas with a comprehensive exploration programme. Across the region new opportunities are constantly being reviewed as we seek to continue to expand on CAMEC’s position as a pan-African exploration, mining and production company with a broad and exciting portfolio of investment assets.
"Control of logistics is crucial to our operational success and we have accordingly raised our number of Volvo trucks and trailers in SABOT to 450, to ensure that we continue to reap the strategic and logistical benefits that we derive from owning that business in support of our regional growth.
"The strategic development of our assets has contributed to our financial performance and I am pleased to report a pre tax profit of £15.7 million (2006: £1.1 million loss) on turnover of 69.5 million (2006: £11.0 million). This is despite an amortization of goodwill charge of £3.5 million.
"It is a testament to the whole CAMEC team that we have achieved this financial performance, while at the same time constructing, in 12 months, a state of the art copper cobalt SX/EW facility in the DRC which is already producing copper cathode, and also dealing with the suspension of operations by our joint venture partner on the Mukondo concession area. With regards to the immediate future, our rapid production growth and installation of additional SX/EW modules at Luita as well as the development of the mines at Disele and Kababankola should drive financial growth in the coming year. In addition, management is confident that its continued efforts to achieve a resolution to the Mukondo situation will be successful and, if so, this will contribute to the financial performance in the second half of this year.
"I am also pleased to announce that later today we will be issuing our Offer Document for Katanga Mining. This will contain a more comprehensive review of CAMEC’ activities as well as a detailed explanation of the terms of the transaction. The Board is confident that it will obtain the support required to ensure the deal is concluded. Consultancy firm, Behre Dolbear, has produced a [NI] 43-101 compliant Technical Report on the DRC mineral properties for the purpose of the offer. The combined businesses of CAMEC and Katanga will create a leading copper cobalt company with growing production as well as quantified and increasing resources. Management believes that the deal will create significant value for both companies’ shareholders through the realisation of financial and operational synergies. The combined group should achieve a higher valuation rating than either company alone. The new entity will also be well placed to exploit any attractive value creating opportunities that may arise from further consolidation amongst copper cobalt producers in the DRC and elsewhere."