To view the PDF file, sign up for a MySharenet subscription.

KUMBA IRON ORE LIMITED - Kumba Iron Ore technical update

Release Date: 09/12/2014 13:30
Code(s): KIO     PDF:  
Wrap Text
Kumba Iron Ore technical update

Kumba Iron Ore Limited
A member of the Anglo American plc group
(Incorporated in the Republic of South Africa)
(Registration number 2005/015852/06)
JSE Share code: KIO
ISIN: ZAE000085346
("Kumba" or the "Company")

Kumba Iron Ore technical update

Kumba announces that Sishen mine continues to perform well against its operational plan and remains
on track to increase production to 35 Mt in 2014, 36 Mt in 2015 and 37 Mt from 2016. Kolomela mine's life
of mine (LoM) production capacity has been increased to 11 Mtpa from 2015. Studies are in progress at
Kolomela, which could result in increasing production further to 12 Mt in 2016 and to 13 Mtpa from 2017.

At Sishen, the Operating Model, which was implemented in August 2014 at the ore and internal waste
mining operations at North mine, is already yielding results including:

    -   Improving scheduled work to increase efficiencies
    -   50% reduction in waiting time on shovels
    -   23% efficiency improvement in total tonnes handled since June 2014

In 2015, the Operating Model is expected to be rolled out to the pre-stripping operations at Sishen mine to
meet ramp up requirements, and to the Kolomela plant to increase throughput to 13 Mtpa in the medium
term.

Kumba aims to deliver ~5 Mt low capex production growth, which includes 2 Mt from Kolomela and the
remainder from Sishen.

Kumba anticipates total iron ore production of ~47Mt in 2014, 47 – 48 Mt in 2015, 48 – 50 Mt in 2016 and
48 – 50 Mt in 2017. Blended free on board (FOB) cash costs are expected to be $35/tonne in 2014,
$39/tonne in 2015, $40/tonne in 2016 and $41/tonne in 2017.

In the current low price environment, which is expected to persist, Kumba is reviewing all aspects of its
business including:

    -   Optimising its production portfolio, focusing on low cost production, to optimally fill the rail line
        capacity.
    -   Assessing Thabazimbi mine as part of the portfolio.
    -   Reviewing capital expenditure requirements and costs. Based on the current review, the
        Company is planning to reduce SIB capex (including deferred stripping at Sishen and Kolomela)
        by approximately 20% and a further 10% in 2015 and 2016 respectively when compared to SIB
        capex guidance disclosed in the 2013 Anglo American Investor Day presentation.
    -   Reducing exploration, technical and project studies expenditure by ~ 50%.
    -   Proposed restructuring to deliver on the revised portfolio, potentially reducing Head Office roles
        by ~40%.

The Company will provide more details at the Anglo American plc ("Anglo American") investor
presentation this afternoon in London. The presentation will begin at 15:30 CAT and end at approximately
18:15 CAT, and will be webcast live via the Anglo American website [www.angloamerican.com]. The
presentation slides will be available on Kumba's website [www.angloamericankumba.com] from 13:30
CAT today.

A further operational update will be given at the Company's 2014 annual results presentation on 10
February 2015.

This announcement contains forward-looking statements and is subject to a number of risks and
uncertainties, many of which are beyond Kumba's control and all of which are based on the Company's
current beliefs and expectations about future events. The operational and financial forecasts provided in
this announcement are estimates and have not been reviewed and reported on by the Company's
external auditors.

Centurion
9 December 2014

For further information, please contact:

Media                                                   Investors
Gert Schoeman                                           Esha Mansingh
Tel: +27 (0)12 683 7019                                 Tel: +27 (0)12 683 7257

Sponsor
RAND MERCHANT BANK (A division of FirstRand Bank Limited)

Date: 09/12/2014 01:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Share This Story