Metorex says results to date encouraging

[LesCrozes]

UPDATE 1-Metorex says results to date encouraging
Wed Jun 15, 2011 8:50am

* Power supply risks in the DRC seen until well into 2012
* Says may sell Sable Zinc even if Vale offer not approved

JOHANNESBURG, June 15 (Reuters) - South Africa's Metorex (MTXJ.J: Quote) says results from its copper and cobalt operations are encouraging so far this year, but power supply risks in the Democratic Republic of Congo are likely to persist until 2012.

Metorex, with a busy project pipeline and potential for other brownfields expansion, seeks to more than double its current annual copper production of around 50,000 tonnes. [ID:nLDE71R21N]

"Given the steady-state production platforms at the major operations of Chibuluma and Ruashi and strong forecasted copper prices, (Metorex) views its prospects in the forthcoming period with confidence and results to date this year have been encouraging," Chairman Rob Still said in his annual general meeting speech.

"Operations, particularly in the DRC, may be adversely impacted by power supply difficulties. Although a regional programme is underway to upgrade and improve power infrastructure, risks of irregular power supply will remain well into 2012," he said.

Still said the company's board will in August decide on its planned Kinsenda project in the DRC, which Metorex has said in the past could increase the company's copper output by 40 percent and would cost up to $150 million to develop.

"The scale and funding of this relatively high-grade new Kinsenda mine will be within the sensible funding capacity of the company, given its current balance sheet and cash flows generated from existing operations," the chairman said.

Metorex said last week that it would sell its interest in Sable Zinc Kabwe to Glencore (GLEN.L: Quote) for 225 million rand ($33.24 million). [ID:nLDE75707D]

While the sale was one of the conditions attached to a takeover offer for Metorex by Brazilian mining group Vale (VALE5.SA: Quote), Still said that Metorex may dispose of Sable even if the Vale offer is not approved as the asset is not seen as core to the company and the price offered by Glencore was "fair and reasonable".

Shares in Metorex were up 0.41 percent at 7.33 rand by 0841 GMT, compared with a flat Johannesburg All-Share index .JALSH. (Reporting by Agnieszka Flak,)