Interview with Miles Naude, General Manager , MMG Limited on updates from Kinsevere and MMG’s Limited planned expansion plans

Miles Naude, General Manager , MMG Limited

Miles Naude, General Manager , MMG Limited

MMG Limited (“MMG”) is a mid-tiered diversified mining company head quartered in Hong Kong and listed on the Hong Kong Stock Exchange. In the DRC, you own and operate the Kinsevere Mine. Could we begin with a brief introduction to the project, its history and current stage of development?Kinsevere was originally owned by Anvil Mining and commenced production in 2007, initially processing copper concentrates through a heavy media separation (HMS) plant. Anvil Mining mined out of two pits and the ore went through to heavy media separation, creating an early copper concentrate. Post 2009, an electrowinning plant was built that started as an acid dissolution SX-EW system. MMG acquired Kinsevere from Anvil in 2012. Through 2012, with the electrowinning circuit going into operation, MMG produced 32,866 tons of copper cathodes. The HMS Plant was stopped prior to electrowinning starting and in 2013 Kinsevere produced 62,076 tons of copper cathodes exceeding its nameplate production in MMG’s first full year of ownership.

How important is the Kinsevere project to the company’s overall business strategy?

MMG currently has five base metal operations. In Australia, MMG owns and operates Rosebery Mine which is a polymetallic base metal mine, Golden Grove which produces predominantly zinc with copper and Century which is the world’s third largest zinc mine. MMG also has a copper and gold operation in Laos called LXML Sepon, owned and operated in partnership with the Laos Government. Kinsevere is MMG’s latest acquisition and last year contributed more than 20% of MMG’s total revenues.

Are your production levels driven by the performance of copper on the London Metal Exchange and what trends have you identified as influencing the price of copper?

MMG sees value in the base metals market and believes that demand will drive a positive trend in base metal prices. Being majority owned by China Minmetals Nonferrous Co. Ltd. also confers to the company a strategic benefit because China itself is one of the world’s biggest consumers of base metals and has in-depth market knowledge of future demand.

MMG’s yearly budget plan is set according to long-term price assumptions on commodities. Those price assumptions give us a view as to what can be expected in terms of performance in the commercial and operational spheres. Mining companies are not price drivers but price takers. Whether the price of a commodity increases or decreases we need to remain flexible and always work to maximise the value of our assets in order to maximise revenue and deliver value back to our shareholders.

The government’s current electricity rationing programme in the DRC highlights a pressing issue.  What is MMG doing to cope with the energy related challenge in the country?

The issue of energy supply in Katanga remains one of the major challenges for mining companies operating in the region. In 2012, MMG installed 12 generators to bridge the gap in energy provision to the mine. 2013 was also a challenging year in regards to power supply; as a result MMG installed further generator capacity to ensure that any deficit in power delivered from the grid to the mine is amply taken up by diesel generation. Diesel generation is however five times more expensive than any grid supplied power; be that from SAPP or from SNEL itself and energy costs at Kinsevere rose by about US$45 million in 2013 due to the use of high-cost grid-sourced and diesel-generated electricity.

What can you tell us about MMG’s policies in the DRC when it comes to environmental protection and social development?

MMG is an active member of the International Council of Mining and Metals (ICMM) and we are therefore bound by ICMM’s sustainable development principles. We are responsible and reliable in regards to safety and the environment and support community initiatives that contribute to the ongoing social development of the region. In the DRC, MMG is currently contributing to infrastructure upgrades by building roads, clinics and schools, operating a bursary scheme with the local university and offering scholarships to children. We are also contributing to government agricultural initiatives by supplying maize, seeds and chemicals to farmers with the aim of purchasing back those crops for use within the mine site. Other social development programs involve educating the farming community as to how to sustainably increase crop yields and undertaking a pilot aquaculture project.

What about MMGs plans for future exploration activities in Katanga?

MMG is advancing an aggressive mine exploration programme in the region. In 2013, the Mutoshi Tenement in Kolwezi was exchanged for eight prospective mining tenements’ close to Kinsevere and MMG also purchased three further tenements close to the mine with a view to assess how we can supplement, augment or expand production at Kinsevere.

What are your objectives in the mid-term? 

MMG is active in the exploration and mergers and acquisitions fields and in Africa we are excited about the Coppberbelt region and Tanzania. Kinsevere will continue to work as our springboard and we are currently intensifying our programmes to expand our operations. MMG also recently announced the entering into of a share purchase agreement with GlencoreXstrata to acquire the Las Bambas copper project in Peru, one of the biggest future copper operations in the world.

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