LIMITED MINING KATANGA
INFORMATION FORM ANNUAL
FOR ENDED THE YEAR
31, DECEMBER 2008
29, March 2009
CONTENTS TABLE OF
REGARDING CAUTIONARY FORWARD-LOOKING STATEMENTS NOTE 2
STRUCTURE CORPORATE OF KATANGA MINING LIMITED 3
DEVELOPMENT GENERAL BUSINESS KATANGA OF THE OF 4
FACTORS RISK 15
PROJECTS MINERAL 23
DIVIDENDS 30
DESCRIPTION CAPITAL SHARE OF 30
SECURITIES FOR MARKET OF KATANGA 31
OFFICERS DIRECTORS AND 31
PROCEEDINGS LEGAL •GULATORY AND PROCEEDINGS 36
INTEREST MANAGEMENT OF INSIDERS MATERIAL AND TRANSACTIONS IN 36
AUDITORS, REGISTRAR AGENT TRANSFER AND 37
CONTRACTS MATERIAL 37
INTERESTS OF EXPERTS 39
ADDITIONAL INFORMATION 41
GLOSSARY OF TERMS 42
SCHEDULE "A". A1
SCHEDULE "B". B 1
(the "Corporation" "AIF") Katanga "Katanga" Mining annual information form the in refers Reference this to to
or
subsidiaries, expressly requires. the Except Limited and unless otherwise stated otherwise its
context or as
prepared indicated, all data contained have otherwise financial been and financial in this in AIF statements
Canadian All this United dollars unless
in accordance with GAAP. in AIF stated States amounts
currency are
mining preparation have used this otherwise indicated. Certain and been the in AIF. metric of terms measurements
Geological/Exploration "Glossary description for these and
Please the of Terms Terms" of
terms see a
measurements.
•GARDING CAUTIONARY NOTE FORWARD-LOOKING STATEMENTS
"forward-looking meaning within the contains United Securities' This A1F statements" the of States Private
legislation, concerning Litigation Rg/brm business, operations 1995 similar Canadian financial of and the Act and
Forward-looking performance Katanga. include, and but condition limited with of to, statements statements
not
are
developments operations planned anticipated periods; exploration Katanga's activities; future in the in respect to
adequacy future; conditions Katanga's estimated financial and other that of
in the
events
may resources or occur
production ability significant Katanga copper/cobalt ability synergies; the of become low and the
to cost
company;
a
ability shareholders; financing Katanga Katanga expected value for its the of of continue to create to meet to
price requirements; cobalt; realization future of and the estinaation of mineral the the and
copper
resources; reserves
capital production; timing production; of mineral the estimates; estimated future and of of amount costs
reserve
permitting permitting, processing exchange mining expenditures; issues; lines and fluctuations;
time rate
currency
or
regulation mining operations; interpretation concerning results; information the drill of of of government
success
unanticipated exploration activities; risks; disputes reclamation claims; and title
environmental
expenses; or
forward-looking by Generally, these limitations
identified be insurance
the of
statements
coverage.
on
can use
forward-looking terminology "plans",
"expects" expect", "budget", "does such expected", "scheduled", "is
not
as or
"intends", "estimates", "forecasts", "anticipates" anticipate", "believes", "does variations of such words
not
or or or
phrases "could", "would", actions, that certain "may", "might", and results "will "will" be
state events
or or or
Forward-looking taken", achieved". opinions '•occur" "be based the and of
estimates statements
or are on
they subject made, the date of such
and risks, unknown known and
management statements
to are as are
results, activity, and performance uncertainties other factors that the actual level of
achievements of
may
cause or
Katanga materially expressed implied by forward-looking be different those including from such to statements,
or
during
limited unexpected construction, risks related expansion but and variations in to to: start-up; not
events
ore
grade, delay
mined; approvals; availability board timing failure and receive of external
government to tonnes
or
or
financing
acceptable operations; risks related international evaluations; economic conclusions of terms; to
on
changes project plans prices cobalt; in refined; possible continue future of be
and parameters variations to
copper as
grade plant,
anticipated; failure equipment in political of
rates; operate
to reserves,
recovery
or processes ore or
as
accidents, insurrection; disputes and mining industry; delays terrorism; labour and of other risks of the in
acts unrest
completion development the activities,
of well those construction herein factors
referred discussed in
to
or as as or
Analysis Management's the annual Katanga and regulatory of filed Discussion certain the with securities of current
Although authorities Canada and available in attempted identify www.sedar.com. Katanga of has management at
to
important materially resuks factors that could forward-looking differ actual those from contained in to
cause
factors anticipated, there that
be be other results
estimated intended. statements, There be
to not may cause as
or can
that
be
such will results and actual
differ materially future could statements
accurate, to
events
prove no assurance as
anticipated place Accordingly, from those
such forward-looking should in undue readers reliance statements. not
on
update Katanga forward-looking incorporated undertake does
herein, that statements. not to statements any are
applicable accordance with in securities laws. except
-3-
CORPORATE STRUCTURE KATANGA OF MINING LIMITED
Name, Incorporation Address and
incorporated July 8, Gold Corporation the October The Ltd. 7, laws Bermuda under of 1996 New On Inca
was on as
Corporation changed the consolidated shares for basis and 2004 from New its its Inca
ten
common one name on a
changed Katanga Mining
Ltd. Balloch Corporation 30, November its Gold Ltd. On the Resources 2005 to
to name
capital
Corporation 2, 2007, 1,000 Limited. of the authorized share the increased On November of consist to was
$0.10 300,000,000 shares shares each $12.00
each and with value of with value of
par par
common common a
a
(collectively Shares"). Corporation bye-laws 2008, 11, amended January On the of the in the "Cornmon
were
Merger (as defined) things, the hereinafter increase the number of ;vith other connection maximum to,
among
Corporation permit relating directors Corporation the into shareholders and the with of 10 agreements to to enter to
appointment give directors Management the those Insiders of and of and effect See "Interest in to agreements. to to
capital
Corporation 12, 2009, Transactions". January Material authorized the On the share of increased to was
1,000 $12.00 5,000,000,000 of Cormnon Shares with value and Shares with consist of
each Common
par par
a a
US$0.10 each. value of
Katanga's registered Street, Hamilton, EX, located and head office Court, is Canon's Victoria Bermuda. HM 22 at
Relationships Inter-corporate
following diagram inter-corporate relationships The describes Katanga Katanga's and material the
among
(with jurisdiction parentheses): subsidiaries incorporation of the in
Katanga Mining Limited
(Bermuda)
OO% 100% 100% 100%
Mining (UK)
Mining Katanga Limited. Katanga KFL
Mining Katanga
(British Virgin Limited Finance Limited
Holdings imited
(United Kingdom) Islands) (Guernsey)
(Isle Man) of
•
00% 100% 100%
Enterprises Global Nikanor Mining Katanga Services
75%i I/
(UK) Services Corporate Limited. Limited.
(PTY) (South Africa) (British Virgin (United
Kingdom) Islands) Limited
m 75%
Copper Kamoto
Copper DRC and Cobalt Company
Project SARL SARL
(Democratic Republic of Republic (Democratic
Congo) Congo) of
•
25°/°
G6n6rale des des Mines La Can'ibres et
("Gdcamines")
capital by (1) of share Note: 05% capital by is held GEC the of DCP 0.05% of the share of KCC held nominees nominees of and is of KFL.
-4-
THE BUSINESS OF OF F•TANGA DEVELOPMENT GENERAL
Kamoto Joint Venture
Kamoto Joint Venture
hold, redevelop, rehabilitate and Joint formed order the Kamoto Joint The in Kamoto Venture operate to
was
(the Assets"). through (as defined Venture, The Joint KCC "Kamoto Joint Venture Kamoto Venture assets
exploit, herein), permits otherwise and leases Gdcamines Joint the KCC mine and from Kamoto Venture Assets to
operations. utilize for the Kamoto Joint Venture Assets its
provides expertise Agreement contribute technical The Joint that the and Kamoto Venture KFL must necessary
capital expansion Kamoto the of the Joint Venture for Assets.
Republic incorporated organized Congo ("DRC"), the and KFL and Gdcamines Democratic the in of
company
a
("KCC"), hold Copper Company KCC owned the Kamoto Joint Kamoto SARL Assets. is known Venture to
as
by board, by and members which four of 25% G6camines. 75% KFL KCC has nominees of
six KFL.
person
a are
provide funding operations. Under all Agreement, the Kamoto Joint Venture KFL conduct must to
Operating Agreement Operating Limited Kamoto
incorporated Operating ("KOL"), DRC, the has SPRL laws the been
Kamoto Limited of pursuant to company a
appointed Joint Joint the the Agreement of Kamoto Venture Venture and Kamoto
operator pursuant to to
act
an as
by Operating Operating operating (the Agreement") which executed "Kamoto Limited has been KOL agreement
Corporation Katanga, 2, KCC November The understands that shareholder and and 2005. director of of
current
as a
namely, George Chairman, President, and Forrest, shareholder Chief Executive Officer and and former Mr. current
a
director, o•vnership Corporation namely, Ditto, currently have substantial The Arthur KOL. interests is Mr. in
negotiating acquire the shareholders KOL See Officers Conflicts of with of KOL. also "Directors and Interest". to
Operating Operating Agreement establishes conditions The Limited KOL, the and which Kamoto pursuant terms to
planning
provides exploration, development, mining, processing in services KCC the conduct of and operator, to
as
budgeted operations expenditures equal and related the with 3% of Kamoto Joint Venture Assets. A fee respect to to
operating capital (excluding (on basis) costs) financing payable of and income and KCC accrual for is taxes costs
an
adopted budgeted S/pound capital expenditures expressed combination If of and KOL.
and dollars in to
program
a
approved produced budget by budget for such of 10%, total than fee will be exceed 2% KOL's of
copper an more
budgeted expenditures; expenditures conversely, budget, such less 10% than shall than if KOL receive
are more
a
budgeted expenditures. Corporation agreed total has G6camines Operating 4% The fee of of with that the Kamoto
Operating September 30, be later than Limited will Agreement also and terminated 2009. See "Directors no
Officers Conflicts of Interest".
DCP Venture Joint
The formed order and transform DCP Joint Venture in
cobalt associated mineral and to extract copper,
was
substances Assets, close the namely deposits in KOV, the Kananga Joint Venture and
Kamoto of to
an area
("DCP permits Tilwezefnbe Assets"). exploitation these Joint Venture The DCP for transferred
to
areas were
granted joint when processing into, and lease the entered certain related DCP of
in respect venture to
was a was
provides expertise installations. The Agreement Venture that GEC shall DCP Joint contribute the and technical
capital expansion order the rehabilitation and of the processing installations. in to out cmvy
Enterprises ("GEC") Corporate Limited organized Global incorporated and and G6camines
DRC
company, a
Copper ("DCP") Cobalt by SARL hold known DRC and Venture the DCP Joint 75% Assets. DCP is owned to
as
eight by board, and has members
GEC 25% G6camines. DCP which nominees six of of GEC. Under
person
an are
obligations Agreement, funding Joint provide the operations. GEC has DCP Venture conduct certain The to
to
acquired Corporation plc acquisition 100% interest GEC the ("Nikanor") of Nikanor described of in
in part a as as
Developments" below. "2008
below, mining by described further detail the of of licences has been initiated in review which the As part
as
proposed DRC, by it that the Joint be unified of the is the Kamoto Joint Venture and DCP Venture government
single joint entity
the of KCC and DCP into of entered and amended with into
agreement venture merger means a an
Gecamines.
Developments 2006
Corporation financing (and Option May 2, 2006, the closed exercised) Under•vriters' On and raised the
a was
proceeds CDN$152,250,000. subscription price receipts 21,000,000
of of total issued of A aggregate
at
gross were a
subscription subscription CDN$7.25 receipt. receipt acquire Each
the holder Share entitled Conunon to
per
one
Option Corporation defined) of further consideration. (as without hereinafter The exercised the June in payment
any
whereby acquired Corporation outstanding the the 2006 100% issued and shares of KFL. of
Corporation 11, 2006, October indicating regulators filed the the On Canadian notice with securities the
a
Corporation adopted wholly-owned December subsidiary, had the end 31 of its
KFL, result of the
year as a acquisition.
2006, 17, Corporation, August the the Effective of resigned former auditors LLP, & Smith Nixon Co. auditors of
as
Corporation. August 2006, the 24, Corporation appointed the PricewaterhouseCoopers Board of Directors On of the
Corporation auditors the the for for LLP 2006 fiscal as year.
August
2006, Corporation 30, signed the On primary required that had of the announced it all
contracts
to necessary
complete Engineering the required Management Phase Construction Procurement initial work the rehabilitation for
mining complex Kamoto/Dima of the the in DRC.
Corporation placed 26, 2006, October key that the On required announced had several orders it for components
to
complete rehabilitation Projects of (see Phase the "Description the of Katanga" below) the Kamoto of of Business
January 2007, Corporation and 31, the important announced
required awarded that had it
two contracts to on
complete Project. Phase the rehabilitation of of the Kamoto
2006, completed Corporation offering 20, ("Units") the On November of
the units in of CDN aggregate
amount an
$115,000,000
by
which included the exercise tmderwriters of their option purchase the additional CDN
to
an
$15,000,000
CDN$1,000 Each
Unit consisted Units. of unsecured ("Notes") of subordinated
and 40
note a
common
purchase ("Warrants"). share The
wilt 2013, 30, November Notes with interest
annual warrants mature rate
on
an
payable of 14%. November the from Interest
20, capitalized Notes paid 30, 2006 June
and 2007 be will
to
on was
on
maturity. Semi-annual interest cash January the 1, commenced Notes 2008. Warrant the payments Each entitles
on
purchase holder
Common Share
anytime
before
20, price November 2011 CDN$8.50 of
to at
at
one on or per a
Share. trading The Common Notes and commenced the Warrants symbols TSX November 20, the 2006 under
on on
KAT.WT, respectively. KAT.NT and Katanga" also "Market See Securities of for and "Material Contracts" below.
Developments 2007
Profile Production
22, Corporation March 2007, the On
anticipated production announced in increase the Kamoto Joint Venture.
at
an
publication by Corporation followed The February the the
year-end 22, 2007
of and announcement
on
new reserve
estimates 31, for December 2006. resource
18, 2007, Katanga On December production begun announced Project, had that the Kamoto the with first
at
copper
cathodes stripped the Metallurgical Luilu sheet section in
of the ("Luilu"). Plant 18-month, This followed starter
an
US$ refurbishment 176 million on-budget. delivered
that on-schedule and program was
-6-
Metals LN
Metals") Corporation appointed May ("LN 2007, Metals International Ltd sole for and 29, the 2007 On LN agent as
marketing cobalt Joint 2008 for the of and from the Kamoto Venture. copper
•D•ke-over •54MEC Bid
Exploration ("CAMEC") Company May Mining 4, 2007, African announced entered Plc it had On Central & that
shareholding approximately
private position of would which it increase into series its agreements pursuant to to
a
ownership outstanding Katanga. 22% then-issued and Common Shares the of the result of increase in of of As
a
by adopted (the plan rights CAMEC, 10, of shareholder the May Common Shares Board Directors 2007
on a
Plan"). Katanga implementation Rights that, also announced addition the the Shareholder "Shareholder in of to
Rights evaluating assembling
advisory Plan, strategic Board all alternatives and in the assist it
to team
was was an
optimized. ensuring that shareholder value was
outstanding 2007, August Shares 29, CAMEC commenced formal take-over bid the and On for Common
a
September expired subsequently Rights bid 6, accordance withdrew the The Shareholder 2007. Plan in with its on
9, November 2007. terms on
Financing The Glencore Finance
facility (the US$150 2007, 5,
Facility") provided Katanga closed million loan the On November "Former Loan
to
a
by Facility Corporation Corporation Glencore KCC, The Former made available the Finance. Loan in which to was
Facility The Former had the of has 75% interest. secured
Loan from date the loan
senior term two
year a
a
Agreement") (the Katanga Glencore, 5, dated November entered "Former 2007 into bet•veen and Loan agreement
plus 4%, payable During Facility, KCC and maturity. LIBOR the bore interest the Former the of Loan at term
upon
outstanding principal option convertible, of loan whole the the time
Glencore in of in
part amount at at
any
was or
(the Option") "Exchange 9,157,509 price into maximum Common Shares of ofUS$16.38 Finance
share
at
per
a
a
(the Price"), 31, accordance with (the "Conversion in conversion dated October the 2007 "Conversion agreement
by Agreement") Katanga January 12, 2009, into and entered Glencore Finance. Effective the Former Loan
Developments--Amendment Agreement the Agreement amended restated. and Conversion and See "Recent
were
Facility". and Restatement of Former Loan
Off-take Glencore Agreements The Finance
signing with the Agreement Finance, the with Katanga Concurrent of Former entered into Loan Glencore
Agreements") (the purchase "Off-take with which Glencore Finance Glencore Finance will agreements pursuant
to
produced by quantity pre-existing (subject 100% the of and cobalt of KCC sales commitments LN to to
copper
Metals, period above) by described for often market Agreements provide Off-take for The
at terms. payment
years a
expected loading payable of the Glencore Finance of 90% value the with sales balance mine the gate
at upon upon
delivery discharge the Management of the metal Material also "Interest and See Transactions" of Insiders in port. at
and Contracts". "Material
Developments 2008
Katanga ("Merger") between and The Nikanor merger
6,
2007, November Katanga announced that had On reached the board of directors it with Nikanor of agreement
on
recommended Merger companies. Merger, Katanga of the the of the became the result of
As terms two
a a
owner
indirectly) (directly
Katanga companies. particular, of number GEC, became the indirect of
which of In
or a owner
the Further details is of 75% of DCP. of the DCP above. Joint Venture
set out owner are
Following special general meeting Shareholders Katanga held January Katanga of of 11, that 2008,
announced
a on
wholly bid take-over for outstanding Nikanor declared its unconditional of result of the
90% Nikanor
was as
over a
having
Katanga proceeding tendered shares been remaining offer and the the acquire that shares of to
to
was
compulsory acquisition procedure. Nikanor pursuant to a
-7-
implemented by Merger Katanga of take-over bid shares the basis 0.613 shares of and
The for Nikanor
way was on a
(by by Nikanor) $2.16 cash of cash for Nikanor share accordance the held. with of
US each in In return terms
way
a
(i) Merger, 127,168,221 issued delivered and consideration the Katanga Shares for the Common from treasury
as
compulsory procedure, (ii) acquired through acquisition the and and certain Nikanor shares tendered offer the for to
outstanding prior January 25, 2008, securities Nikanor the the Merger. made convertible of On cash to return to was
January 21, shareholders record Nikanor of 2008. on
acquisition Katanga business the 51-102 connection the
filed for National of Instrument with in report purposes a
Merger SEDAR www.sedar.com. at on
agreed
modified the the it that Merger, Agreements Off-take with include time of the Glencore would be At to
was
produced during subsequently acquired by by 100% life all Katanga cobalt the of mines owned of and
copper or
existing Agreement". commitments). sales See "Material Joint for (save Contracts--DCP Venture any
Release Agreement and DRC mining Concession review
February Corporation (the 8, 2008, KFL, the announced that G6camines and KCC had entered into On agreement
an
Agreement") exchange security compensation, "Concession that and the Release release in for payment sets out to
deposits. portion the of the Dikuluwe concessions that the Mashamba and Gdcamines of These KCC West represent
deposits
included Corporation 23, the amended technical of the which in scheduled June 2006
report
not were were
producing respectively. discussion oxide until and G6camines first 2020 2023 As of the with in the start part to ores
Agreement amended 2009, Concession Release be of the will discussed below. quarter as
below) provides (as by referred Concession Release amended the The Agreement discussions G6camines for
to
to
replace July deposits by deposits having 3,992,185 1, with other these of and 2015 total of
tonnage
tomaes
copper a
according 205,629 agreed The equivalent cobalt parties of international standards.. have fix value the of tonnes to to
deposits US$285
payable July (see below). July million, released 2015, 1, 1, 2015 the parties the On will at
on
proportion replaced by July calculate the the date. of G6camines that that 1, 2015 To the
extent at at
reserves
as
deposits, parties replacement there shortfall calculate the shall proportion is in the the the shortfall of of amount
a
compensation payable multiplied by and financial the US$285 be calculated shortfall shall the million. percentage
as
remaining (being royalties Any due be G6camines' will from due future dividends and from payments met
revenues
Merged below), July 2015) (as outstanding 1, due the defined until full has from JV been made. Any payment
July plus 1, shall the month after 2015 of LIBOR 3 interest 6 rate anaounts cent. at carry per
provided exploitation the exchange Concession permits The for transfer Release of Agreement in for payment.
a
provision has provided been below. This amended
as now
February Corporation 2008, 21, that and had the On announced KCC received written notification the DCP from
outlining points mining of of the require Minister number further discussion Mines DRC of that of the
part
a as
by feasibility by points review initiated the DRC These included: submission the KCC of studies and government.
joint DCP; the G6camines' role schedules achievements of the the in of for submission of management ventures;
royalty projects; social and the addition, re-examination lease facilities. of DCP, Ibr In with the payments respect to
plant and of discussions, lease G6camines clarified. the be result of such certain As
payments status to to
were a
original ongoing details Agreement of Release have been modified the Concession discussions of the
part
now as
Corporation mining by and G6camines between the initiated the the review DRC to pursuant government
see
Developments KCC/DCP Agreement" below. Combined Joint Venture "Recent
signing understanding 2008, August Corporation ("MoU") 5, the On the of memorandum announced of with
a
amending G6camines be will provisions the Agreement that the basis for incorporate the Kamoto Joint Venture of to
joint addressing Concession Agreement; merging and the and requirements Release the DCP KCC DRC of ventures;
resulting resulting mining parmerships from the of combined Gacamines and review with in government
a
Agreement ("Combined Agreement") KCC/DCP ("Amended Joint Venture KCC/DCP Joint JV Venture or
Agreement").. See "Risk Factors".
-8-
key provisions the The of MoU were:
merged JV") ("Merged KCC will be DCP and
capital wholly Merged Katanga's share allocated owned subsidiaries the of the of JV be KFL 75% to
subsidiary; Limited and GEC their related entities and G6camines each and its with of 25% consistent to
or
existing joint the agreements. venture
US$100,000,000. Merged US$1,000,000 capital increased the will be Share of JV from to
joint inrplementation Combined additional Upon of Agreement, KCC/DCP Joint the of all Venture 5%
150,000 the funding project until reaches will of be non-interest output venture tonnes
copper year
per
bearing
plus remaining the will bear 95% interest 3%. and than LIBOR greater at rate not
a
equipment provided by
depletion royalty and well The for facilities G6camines for
rate as as ore reserve
increase of will from 1.5% 2.5% to net revenues.
mining rights cash for the Concession The first Gdcamines transfer of under article 4.3 of payment to
implementation US$5,000,000 Release made will be Agreement is and of the Combined KCC/DCP on
Agreement.. Joint Venture
members, by eight board directors will appointed whom be The of KCC be increased three of will of
to
day-to-day merged operations joint G6camines, and will venture's within KCC of the management assume
Operating months the date the the elimination of the of will in Limited 12 from MoU. This result Kamoto
Operating Agreement.
changes, together provisions integrated the be Agreement, Release into Combined These with of Concession will the
existing provisions KCC/DCP Agreement. relevant and Joint that will of the DCP Joint Venture terms preserve
updated
the further Venture, the been modified Venture and Kamoto Joint for which have and
matters set out
save as below.
Update Rehabilitation Project
Corporation update 12, the project, August 2008, announced Phase of the rehabilitation stating On of II Kamoto
an
completed expected
by providing 2008, production capacity the be project 70,000 the of that end of Cu
tpa to
was
a
being 3,000 being and II, of Phase third mill rehabilitated and Co. flotation cells As cascade 58
part tpa
a was were
Metallurgical Plant, being added in the circuit Concentrator. the Luilu the Kamoto At
to roaster
was a new
electro-winning capacity leaching Corporation and doubled. constructed and be also the The amaounced to
was
developlnent pit Processing
the KOV and of leach of the construction and Plant. Construction New of
open
a new
facility plant 80,000 acid and the module commenced first of this in June 2008. tonne per year
Corporation 2008, 24, capital expenditure announced On October the review its with focus of commitments
a a on
development optimizing considering development relating market conditions. This has led its review the to
program
pit Processing and the Plant be the of and KOV construction New hold certain
put to contracts to
new
on were
project Following Phase of the rehabilitation review, continued. this Katanga plans terminated. has I! Kamoto
now
develop Projects". Report. business the Combined Tectmical in its accordance "Mineral See to
Corporation provided production update: 6, Copper production 2008, November the market with the On cathode
a
during 6,812 production production the cobalt 14,588 of metal of 356 and of of quarter tonnes; tonnes; tonnes
respectively previous Corporation 28%, and 196% 8% the The
announced also
quarter. concentrate
up on was a
optimizing development capital expenditure considering with review of
focus its market
current program
a on
operating targeted project capital conditions. This maximization flows and the of reduction cash of review
development requirements, optionality expenditure preserving while the Corporation's the for of While base.
asset
capital expenditure progressing in Phase rehabilitation project review for continued. the Kamoto 2 of was
that, Corporation given depressed temporarily 21, 2008, November the price cobalt, announced had the of On it
suspended operations pit mining the processing Thus,
Tilwezembe and the Kolwezi Concentrator. the at at
open ore
production Company ceased cobalt of concentrate.
-9-
provide Report details the with attached Combined Teclmical which also Schedule hereto and the "B" respect See to
updated plan expenditures by Corporation. undertaken the capital mine and recommended be to
Changes Management
Corporation appointment Chief Executive 2008, of interim 2, October announced the the Steven Isaacs On
as
replaced Operating ("COO"). President ("CEO") and Henderson interim Chief Mr. Isaacs Officer Tim Officer
as
joined CO0, interim and Arthur Ditto who announced his retirement 2008. Mr. Henderson in
CEO June
new as a
joined Corporation,
and project operations Henderson role the and Both Isaacs Mr.
the Mr. teams.
to
at on oversee
searching appointing Corporation's and secondment from Glencore while the Board of continued for Directors
a
triggered by Corporation also The the CEO. announced that result of certain contractual entitlements permanent
as a
Stephen Schoening resignations Ditto, President retirement Arthur and A1 tendered their Senior of Vice Jones M.
as
respectively. Affairs, 2008, December Corporate 15, and Chief Financial Officer and Senior On the Vice President
resignation replacement by
Nicholas Corporation announced the of Chief Financial and his Steve Jones Office
as
Brodie.
Facility of Amendment and Loan Restatement Former
Facility. Facility Corporation entering 2008, December 24, announced into the the of the New The New On
was
subsequently split Facility
immediately 2009, closed drawn January in 12, and down full. in The New is two on
parts:
facility by ofUS$100 and Finance; finance million underwritten Glencore
new a
Facility provided by Corporation and amendment Glencore Finance the of Former Loan to restatement
an
approximately which, US$165.3 2007, interest, accrued amounted November with million. in to
February Facility. Corporation completed closing 9, 2009, Effective the the second the the of New Pursuant terms to
principal Facility, closing of accrued interest from second date added the the of January 12, New 2009 the to to
was
Facility. Explorer (who, together ("RP it, related Explorer") RP with insider the Master Fund entities is New to
an
participated appointment rights), together Corporation it, of the the director with entities related New with in to
Facility participation, US$64.5 US$64.5 US$16 the million of million. Of this million in aggregate amount
was
wholly-owned subsidiary transferred Glencore Finance, AG, Glencore of Glencore International and Finance to
a
option entity Explorer, Corporation such issued call the related whose ultimate has
RP
amount to to
owner,
a over
an
family (the advised, "Trust"). the benefit members Gertler Glencore Finance's been is for of of Dan trust
a
participation Facility February completion closing subsequent 9, the second in the New 2009 of at to
was
approximately US$217.5 million.
provided (i) underwriting Facility The 31, dated and side dated December 2008 letter
pursuant agreement to:
was an
(together, 12, "Facility Corporation January Underwriting Agreement") the Glencore 2009 between the and
relating (ii)
Finance; amendment January 12, dated the November 2007 and 2009 senior agreement restatement
to
an
bridge Corporation Agreement") (the US$150,000,000 secured loan of the for "Amendment and Restatement
Holdings Corporation, Mining Finance, KCC, KFL, Limited, Glencore and Glencore Katanga GEC the among
exchange (iii) Finance; Corporation January 12, and dated between and Glencore Finance 2009 the agreement
an
Facility capitalised Agreement"). (the plus "Exchange which The bears interest 3% be New LIBOR will
at
an on
Facility option During of annual basis. the convertible lender the Common the New is each into term, two at
year
Facility adjusted either outstanding (as US$0.2783 Shares while the time New is Share it be for at at
per may
any
days equity (the Price"), equity dilutive "Exchange matters) issues and other time within of
at
any any or seven
by equity Corporation price of US$25 million the Share the converted issuance than the of issuance into at
per
more
Facility addition, mandatory US$250 US the convertible dollars. Shares basis when New is into Common In
on a
by Corporation through equity financing price equal and/or has been raised the million debt the lower of the the at to
adjusted) (as price equity (of million) and Share initial Conversion Price of US$25 the issuance than
per any
more
prior equity weighted
conversion, price such and than such the of such if issuance
to at average occurs, more one
-10-
approximately 953,433,392 equity dollars. of
issuances, converted each in into US An aggregate to up case
Facility the Conversion the issuable
conversion of New Price. Common Shares at upon are
although repaid Facility Corporation right the loan under the rather the has New time than if The at to
any repay
existing mandatorily right converted, lenders subscribe Common the basis their the have for Shares
to
as same on
period. rights expiry the conversion until of the two year
approval the circumstances, Under shareholder and shares conversion
of loan the issuance of normal upon
common
good faith, required. acting Corporation's However, Directors, Board based of in thereof would have been the and in
Hardship comprised Wardell Robert Terry the recommendation of Financial Committee and of the part
upon
independent Corporation director, determined Robinson, whom serious financial of is that the in each
an was
designed difficulty, proposed improve Company, position financial of the the the the that that transaction and to
was
hardship financing Corporation the relied the financial
the reasonable in circumstances. As
consequence, upon
was a
Corporation ordinary result, will, exemption the TSX informed the that in of the in the rules TSX. As it the
course, a
completion delisting financing, that, believes Company
review. The will be of the it in
upon commence a
compliance listing requirements. with See "Risk Factors". TSX
provided primarily Facility rehabilitation, the ongoing the financing under will used for The New be
new
redevelopment operation by Corporation's joint-venture of the and related held and mines its DRC assets
capital working general subsidiaries, Corporation DCP, KCC and and and The requires
for corporate
purposes.
an
equity financing. and/or equity, US$250 US$250 additional million debt million raised and/or the in Once is debt in
mandatorily Facility equity. Management's be also full the will See Discussion converted into the of New amount
Analysis Corporation and of the 31, December available www.sedar.com. tbr the ended 2009 at year
Developlnents Recent
KCC/DCP Agreement Combined Joint Venture
Meetings with Gacamines March in 2009 Minutes of
complete with the Combined KCC/DCP the Discussions G6camines Joint Venture relation Agreement in to to
Merged using continued of framework established the have in the first 2009 the MoU. JV in These quarter
being signed with the the in discussions have resulted further minutes G6camines reflect basis which to
on
Agreement Combined KCC/DCP will finalised. be Joint Venture
Exploitation Necessary Permits, Transfers Other Infrastructure Surfaces of and
agreed deposits. perimeters parties This shall have the of the transfers the KCC/DCP concession The of
now area
following Merged will transferred include which be permits G6camines the JV: the from to
("EP") Exploitation (comprising containing whole 525 the and Mashamba the of Permit 13 carr6s Kamoto
deposits); and East
deposit). (comprising containing carr6s of EP 4958 2 the T17 part
perimeter agreed with that infrastructures has also been G6camines all installations and within the the of it
by Merged being by JV, KCC/DCP shall be rented the rental covered concession G6camines with the
to
area
royalties. agreed
has that Kolwezi Katanga the G6camines who KZC will be returned will concentrator to at
re-
employ following employees. the the transfer former Gecamines
(comprising deposit), exploitation permits (namely containing The DCP EP 10 4960 4961 carr6s the KOV EP
deposit) (comprising (comprising containing Kananga containing the and carr6s 4963 carr6s the 13 EP 9
deposit)) Merged transferred be the intended Tilwezembe shall the that It is
JV of part
to merger
process. as an
deposit, carr6, Kananga by extension the will additional of transferred Gdcamines due be in
as an course.
-11-
agreed merged Agreement, perimeter the Concession Release the the of the will KCC/DCP concession in As
area
operation including Merged JV, surface for the for contain the the of the activities of cm'rent
space necessary proper
tailings Surfaces"). dumps, (the sites, infrastructure Necessary "Necessary Surfaces will and The be storage
new
adjacent exploitation principally permits, comprising sourced commission, 8841. ad hoc technical from EP An
representatives Merged JV, established Gdcamines and the has consider determine the from been and and to
area
they Necessary Necessary determined, shall Surfaces. have been of the Once the rented Surfaces be the
to
source
pending by Merged
basis, independent (funded drilling by Merged JV) the JV interim
contractor to on an an
discovered, identified whether the
surfaces mineral Provided the determine contain
any
reserves reserves. no are
permits multiple exploitation (where required) converted relevant shall (or shall transferred surfaces be into and be
Merged leased) surfaces, certain the
be discovered identified JV. Should the in the in
to
any reserves cases reserves
Merged replacement shall and be the the of transferred shall under JV Concession the
count to terms
as reserves
Agreement, parties Necessary Release and the will
Surfaces. alternative the the for Gecamines
agree as source areas
Necessary parties. shall Surfaces addition transfer the of the G6camines third will certain In grant not to areas
required the business. for easements as
Deposits Replacement
exploration right by Merged by Gdcamines shall the undertake activities the have financed interest JV of free to
way
replacement 3,992,185 loans find of
205,629 of cobalt.
and of Such to tonnes
tonnes
copper
reserves some
exploration exploitation being place
Merged permits take within and outside the activities transferred the JV.
to
can
perimeters deposits exploitation
permits within Any transferred Merged of the tbund the be transferred the to
to
or
deposits, (other deposits,
than Tilwezembe, extension of the the JV East, Kamoto, Mashamba Kananga, T17
at
or
replacement KOV) deposits shall considered be and
discovered other perimeters well other in
reserves, any as as as
exploitation belonging Merged Gdcamines the be transferred the of which JV. to to may
July
replacement 1, deposits, parties there the that 2015 shortfall is in To the calculate
the shall extent at amount
as
a
compensation proportion payable the shortfall and the financial of the of shall shortfall calculated be the
as
multiplied
by paid US$285
million. Any shall bear interest then month of percentage LIBOR 6 amounts
not rate at
a
plus paid 3%. the that time, Merged is such To shall the entitled JV be retain future amount extent not at
to
any
(being Merged G6camines royalties date) from due the dividends JV until due from such full and to revenues
payment.
Merged Financing Capital and Share JV
equity agreed subsidiary has that the been Gdcamines 25% interest of It and its be non-dilutable. The shall
wholly-owned Corporation
its of subscription subsidiaries subsidiary shall G6camines its advance and the
to
one or
by capital million payable US$24.5 them of in of the advance shall the increase. Such of form respect amount
part
pas-de-porte below, consequently described and repayable by shall be G6camines. payment not
proportionate the distributed equity Dividends shall Merged be shareholders stakes of the Of the the in JV.
to
Merged taking (after available (including operating cashflows the of of financing JV account costs expenses,
interest), and allocation the reserves), be shall taxation dividends shall 25% used be and 75% to to necessary pay
borrowings. used shareholder and other to repay
Following funding Merged establishment the JV, requirements Merged the 5% of the of future shall the be of JV
bearing by financing equity production non-interest GEC, from until project KFL reaches the of its met target
150,000 The remainder through of
project financing be obtained shall shareholder output tonnes
per year. copper
or
plus subject interest exceed with agreed, LIBOR
3%. G6camines has conditions, certain that not rate to
to
an
security shareholding given this
be in subject the Merged connection
JV, its in
well
certain
to can over as, as
protections, rights Merged mining titles the and the of JV.
Rental, Royalty de and Pas Porte
royalty payable above, stated
Merged by of 2.5% shall be of As the
G6camines
the for of JV net
to
revenues a use
equipment depletion the deposits. and facilities well of the the this
For be calculated will net purpose, as as revenues
-12-
quality
transportation, namely payable less royalties Code, sales Mining under the DRC the in
same manner as
marketing control, and insurance costs.
by payable the premium") KFL/GEC G6camines for the porte" ("entry shall be "pas de payment to A to
access
completed be follows: will
US$140,000,0000, project. the of which shall total be The payment amount as
being loan, previously by converted de and
paid G6camines into GEC (i) US$5
million
porte to pas as
a a
non-refundable; therefore
by comprise (a) paid US$24.5 paid by million of be be (ii) will million KFL. This US$135 to set-
to way
subscription granted by the advance against G6camines KFL for of the of the be off payment to
amount to
(b) paid days above); US$5 price million •vithin of into the Amended (as JV described be entry to ten
US$15 between 2009 2011 (c) and and million US$10 million annual basis and Agreement
an
on an on
parties The 2015, and US$15.5 2016 in of million. have basis with final annual between 2012 payment
a
paid be deductions agreed off.
these that shall without set amounts any or
payable
replacement the of the for release will de be in of further respect No compensate porte to
reserves pas
Merged brought by the West; however, additional G6camines the JV after Mashamba Dikuluwe and tonnage to
any
compensated fully US$35 deposits de of have will
of been released incur
payment tonne porte copper. pas per a new
Board Management and
by appointed by deputy appointed GEC, agreed the will be CEO been that the CEO will be KFL and It has
employees CEO, CEO, comprising deputy constituted, three of be the shall G6camines. committee A management
employee by Merged appointed
by G6camines. Merged appointed GEC, and of the JV the KFL JV one
General
change
right pre-emption KFL; control there Gecamines shall have the of in of of of restrictions
event
on a a are
operation during mining rights KCC; transfer the commercial of and the and titles of shares KCC first of of
year
liquidation winding KCC G6camines without consideration the of those shall DCP
and return to up upon or
companies;
DESCRIPTION THE BUSINESS OF KATANGA OF
Principal and Products Current Business Initiatives
holding produce companies that and have Katanga
is the of of cobalt metal and that company group copper copper
a
through
DRC, and cobalt the mineral rich countries the held in world. of the The in
assets assets two most
one are
(KCC) (DCP). Cobalt Copper Company Project Katanga's joint Copper and and Kamoto DRC ventures,
assets
Underground through pit (held KCC) Mine, include the the the Musonoie-T17 mine and KOV Kamoto
open
open
through DCP), providing respectively, (held oxide the pit and Kamoto Concentrator the Luilu mine sulfide and
ores
Metallurgical previously adjacent concessions, Plant. the Katanga the of intends combine which part to two
were
Projects". complex. See mine "Mineral same
plants operated initially Katanga of other mines and that be later the
also has number in
stage
at may
or a a
development. Corporation's pit Kananga East, These include the Mashamba and Tilwezembe. mines at
open
suspended Operations temporarily Corporation agreed Concentrator, Kolwezi which be the will have been the has at
returned G6camines. to
produced completion following Joint first cathode the its 2007 Phase The Kamoto Venture in December of
copper
four-phase acquired through DCP, joint refurbishment of the brownfield The second of site.
venture,
a was
Katanga's January with Nikanor in 2008. merger
-13-
which Glencore with Glencore Finance Corporation Agreements has entered into the Off-take The pursuant to
subsequently produced by and quantity the buy owned of the cobalt of and mines 100% will Finance
copper
acquisition place acquired by subject the of the mines. oft-take in time of Katanga,
at agreements to any any new
"Material Contracts". See
development production, require goals exploration, Katanga and will achieve of mineral mine order its In
to
expenditures capital capital working financing "Mineral needs. See additional
and future to
necessary
cover
Projects" Property", Projects Projects "Mineral Mineral "Risk and Factors". The DCP Kamoto
Conditions Competitive
exploration competitive Corporation cobalt The mining with
business. and of and is The competes
copper
a
only personnel, individuals, products, finished but also companies for other and sales for of for not
numerous
Although supplies Corporation
funds. input equipment the entered the of materials and and for has into
to
access
ability
profitability Corporation depend develop existing Off-take the of the will and future Agreements, its its to on
properties effective basis.
cost on a
Dependence Economic
Corporation metals, substantial and which price prices cobalt
has the of and other base The to
exposure copper are
volatility beyond subject Corporation's fluctuation, control. Factors". other the "Risk and factors See to
Notwithstanding Corporation entering Agreements AG, into Off-take Glencore International is the with of the the
dependent particular produces,
become, and does end-user cobalt that
and it of the
expect to not, not copper as on a
end-user market and there is world wide cobalt. for copper a
Changes Contracts' to
agreed above, Merger Corporation described the Off-take be Agreements the time of the that the would As
at
produced subsequently during by include modified and cobalt the life owned of of all 100% mines
to
copper
or
acquired by during modifications made Katanga. These the 2008. of
were course
signing February 2008, Katanga 8, announced the Release also General Agreement. On of the Concession See
Developments Developments Katanga of the Agreement Combined KCC/DCP Business of Recent Joint Venture
Mining "Risk Factors--DRC Review ".
Employees
(together Katanga employees site) 2008, approximately 31, employees. 4,000 December with of had KOL As at
on
employees approximately 2,430 Property, site KOL, there of the the On the Kamoto Kamoto operator at at
are
properties approximately employees Property. KOV, site the Katanga Tilwezembe there who On and 1,523 at
are
(indirectly) employees become Merger. have since Katanga 15, 2008, result the of of the On December
as a
Corporation redundancy announced it had reduce result the that taken its work force of and
to
measures as a
position Corporation. financial of the
Operations Foreign
Substantially
operations Corporation's all of the in the below. DRC. See "Risk Factors" are
Policies Social Environmental Environmental Protection and or
Impact prepared Environmental and Management submitted Environmental Plans have and for been Assessments
Project Project, Together preparation the and each of the Tilwezembe with of Kamoto KOV the mine. the
a
conducting integrated Corporation study, combined Impact the Enviromnental Social is and Assessment
an
("ESIA") appropriate Management produced. from which ("ESMP") will Environmental and Social Plan be
an
designed beyond Corporation compliance compliance This
DRC both is the with the IFC to to
process move
lending Equator Principles Corporation Standards the Performance and which The institutions subscribe. is to many
14-
expected Safety, Health, comprehensive Social which implementing and Environment systems management to
are
compliant organization enable ISO. with the become to
Safety Health and
healthy employees that takes recognizes importance giving safe and work environment into critical of Katanga the
a
training safely provides potential and with hazards and them the inherent risks and operate to account necessary
workplace. effectively in the
taking
DCP, operating committed reasonable companies all DRC, the KCC and Katanga and in its steps to to
are
comply healthy with and that law consistent environment, and work with DRC is in safe
to to act
manner
a ensure a
goal good accidents/zero incidents. practice Senior have international and of
supports management
our zero
throughout organisation. Policy, Safety communicated Health which been has the To Corporate endorsed &
a
implement Occupational approach safety and will Health structured health and KCC
management, support to
an
a
compatible Safety the the 000 requirements is with 14 OHSAS 19008. that of OHSAS ISO system
meets
platform. making possible Management benchmark Environmental it have for
system management to
common a
professionals expatriate safety health safety role Katanga's health and function site dedicated and whose includes at
approach provide expertise
consistency and of the it functional and line
management support to to
to ensure across organization.
auditing Compliance monitoring performed regular Katanga's and will be basis effectiveness evaluate the of
to
a on
provide developed. Quarterly improvement data be be will will and from which made systems reports to programs
appropriate oversight the the level Board of and to governance. ensure
Environment
responsible
employees develop encouraged sound environmental feel Katanga aims where culture all for
to to
are a
redevelopment projects Project key of benefits both and the of of the the DCP in One Kamoto management. terms
involving
relatively existing infrastructure, disturbance the is limited additional extensive of environment the of
use land.
comprehensive study key (sin-face air, noise, includes baseline
The ESIA environmental of aspects water process
a
ongoing ground) and and tandem this these used
dust. with is monitor all of will be In aspects to to
programme
an
develop development strategies mitigate existing additional future environmental and conditions to at manage
Projects" Katanga's sites. also "Mineral below. See
Benefit Economic
monthly Corporation salary local contributes the number of DCP and KCC make The in
to
economy ways. a
paid import employees bought goods and and local and duties contractors, government, payments to taxes to
suppliers local made G6camines. services from and payments to
production capacity, Katanga transfers full the that from combined DCP and KCC expects government at to taxes
redevelopment operations order nearly be 4,000 US$400
million Initial created will of the of activities
per
annum.
jobs. operational phase, people directly employed, During initial 4,000 estimated that with
the it is
to
up
were a
significant indirectly employed people supply number additional of in the chain.
addition, projects Corporation significant focusing the undertaken of has number social in the Kolwezi In
area,
a on
health, education, improvements development inl}astructure, employment in providing alternative and economic
opportunities also Social Local Relations". artisanal miners. See "Risk and Factors to
-15-
RISK FACTORS
Summary of Risk Factors
principal Corporation's high Corporation degree business involves of risk because the in the investment in part An a
exploitation. mineral of is one
following including factors, document, carefully the risk the information this should consider all in Shareholders
as
early development. risk factors in business of The associated with well usual risks investment the
stage
at
a an an as
operations business, necessarily the affairs the risks associated comprise and of below all the with discussed do not
Corporation.
Condition Global F#•anciai Current
subject volatility global financial institutions have have increased and financial conditions been Current to
numerous
public financing by governmental authorities. has be rescued bankruptcy either have had Access imo
to to
gone or
liquidity asset-backed affecting impacted by crisis the sub-prime negatively both and the been mortgages
financing impact ability Corporation equity obtain debt the the of market. These factors commercial to
may paper or
volatility Corporation. levels and and, obtained, the these If increased of favourable future the if in terms to
on
impacted adversely trading price the Corporation's be and the of operations lnarket continue, the could turmoil
adversely affected. be Shares could continue Common to
Speculative Mining Operations of Nature
knowledge experience evaluation, and significant operations that combination careful Mining involve risks of
even a
required adequately expenditures Major develop metallurgical mitigate. and
eliminate
to to
not
processes may are or
deposit commercially particular
mining processing mineral will be facilities site. Whether and
at construct
a
a
grade depends particular deposit, size, which the factors, number of the attributes of such viable of
some are: as
on a
regulations, highly governmental cyclical; including
prices infrastructure; metal which proximity and and
to
are
production, royalties, importing exporting land allowable relating and regulations prices, land taxes, tenure, to
use,
predicted, accurately protection. be the effect factors but The these minerals environmental and of of exact cannot
Katanga receiving adequate capital. invested combination result is There
of these factors in
not return
may an on no
brought particular production commercial will commercial continue be into will in that
property
any
or assurance
beyond production operations above control Katanga. the of factors the of Most
commence. are once
subject normally
Mining high degree of Such all risks operations the hazards operations involve risk. and
to
are a
precious metals, development production including cobalt and other the and of and base encountered in
copper
or
unexpected underground conditions, formations, conditions, geologic activity, surface seismic unusual and water
or
drilling flooding bursts, material, and conditions other involved the which cave-ins, rock in and removal of of
any
damage producing of, facilities, damage destruction and life could in mines other result property,
to,
to
or or
possible liability, unavailability damage legal equipment problems, performance mechanical environmemal and the
disruptions, accidents, majeure unanticipated t:actors, equipment, transportation and labour force force materials of
Milling operations equipment subject hazards conditions. such failure failure of and weather
to costs
are or as
tailings disposal pollution liability. retaining which result and in dams around enviromnental consequent
may areas,
development materially adversely things, affect, and other the of Any
these of factors of
among any can more one or
production Corporation's properties, quantities production expenditures and and and the rates, costs commencement
dates.
Ore Mineral and Reserves Resources
presented and this AIF based Combined The mineral in information contained in
reserves are
resources ore on
publicly given anticipated other disclosed information. Report the Technical and No be that in
assurances can
grades and will be achieved that indicated levels and cobalt will realized. the of
be tonnages copper recovery or
degree uncertainty corresponding the calculation mineral mineral There of and is of and
to
reserves a resources
grades being production. actually mined dedicated future Until mineral mineral
to or reserves or resources are
-16-
only. processed, quantity mineral and be considered estimates mined and the of mineral
must
reserves
resources as
depending things,
quantity addition, the and mineral other of mineral
In
vary
may among on,
reserves resources
quantity change grade striping mineral prices. Any in the metal material of mineral ratio
may
reserves, resources, or
viability addition, properties. there that cobalt be affect the economic of the In
copper can assurance or no
duplicated
laboratory larger metal small-scale be other will in under recoveries recoveries in scale
tests tests
or on-
during production. conditions site or
drilling, prices, metallurgical production testing Fluctuation cobalt and results of and in metals other base
copper,
subsequent plans require estimate. and the evaluation of mine the date of revision The estimate such of to
any may
processed anticipated. grade currently and volume of and be the mined and
not rates
may recovery reserves same as
particular, anticipated grades given be be achieved that the that the and will In
tonnages can no assurance or
cobalt be realized. material reductions mineral indicated levels of and will of Any in estimates
copper recovery
ability Corporation's these mineral could have and mineral of the estimates
extract to
reserves, resources reserves or
adverse Corporation's operations the results financial condition. material effect of and a on
Stability Political
subject political the be the changes, Fhe Joint and DCP Joint Venture effects of and
Kamoto Venture
to may war
changes
policy, conflict, enforcement and in lack of law labour civil and the creation of government unrest
new
changes (which governmental These laws.
other levies other include modified well
taxes
may
as new or as or
profitability viability legislation) impact Corporation's properties. impoverished and the the
of The DRC is may an
physical and infrastructure debilitated condition. with is transition institutional that is in in from It country
a a
largely political principles based and state-controlled free from non-democratic
market
system to
economy one on a
political principles. democratic centralized etlmic with
base based be There
system
to
power more a a on can no
changes objectives
effected these be the achievement these that will that of will have material
not
assurance or
political, Katanga operations. instability adverse for
and The and its effect of social
unrest
consequences
on or
development operations impairment conditions mining result the economic in the in the and the DRC could of at
beyond properties. Corporation's
Katanga Any changes adversely such control affect the of and its
may are
business.
Social Local Relations and
operations Corporation development While the Katanga that will contribute the the its economic of expects to
provide employment region improving and the benefits, the Province in DRC in infrastructure the while and social
Corporation operations impact of the negative addition, have the local environment.
the In of external
may
a on use
employees disruption foreign communities, result and social local which in in the have material adverse could
may
a
Corporation's operating business, effect the condition. results and financial on
Licenses, Regulations Governmental Permits and
Corporation's
subject properties prospecting, governing mining, production, development, The various laws to
are
occupational health, labour standards safety,
substances, and land claims mine toxic land of taxes,
water
use, use,
Although people cmTently
properties local and other activities the with all carried accordance
in matters.
out
on are
applicable regulations
DRC, rules and regulations the that given of be rules will and be
not
assurance can new no
existing regulations applied production that rules enacted and will be curtail in which could limit
not or a manner or
development. or
comply applicable regulations laws, permitting Failure with requirements and enforcement result in actions to
may
including thereunder, by regulatory judicial causing
issued operations orders curtailed, authorities be
to
or cease or
requiring capital include equipment, corrective expenditures, and
installation additional of
may
measures or
engaged exploration development operations remedial actions. mining properties Parties the in in mineral of
may or
damage required suffering by mining be those loss the of activities and civil compensate have
to
may or reason or
penalties regulations. applicable imposed criminal fines violations for of laws
or or
governing operations stringent Amendments laws regulations implementation and thereof could to
current
or more
impact substantial Corporation have exploration adverse and capital the increases in
expenses, a on cause
-17-
producing properties
require production production abandonment reduction expenditures in levels of
at costs
or or or
mining properties. delays developrnent of in
new or
exploitation April permits expire thereafter renewable successive for 3, 2009 and DCP's due
two to
on are are
provided Mining conditions, periods Code, have been breached. While the that certain the of in 15 set not out
years
periods, contemplated
exploitation permits the future there be renewed Corporation be for the DCP expects to can
Corporation's
satisfied, renewal adverse effect the the conditions for be will with material
that
guarantee on a no
business.
Title Matters
diligently rights investigated relating Corporation title and interests and and the has While its its in to, to,
over
Corporation's the mining properties, this should be construed of title and mineral its guarantee
not assets to
as a
by mining mining rights. covered such of the discussions with G6camines it is and/or the As part assets
area
rights Merged defining mining entered be the discussed above in that intended into of the JV
agreements
new as
Developments Agreement". details Combined DCP/KCC Joint Venture Further the the mineral of title "Recent to
Description
below. properties "Property Location" in and out set are
required rights rights Merged properties servitudes, There and the is obtain certain surface that JV in the
to
over are
implementing updated Feasibility projects Corporation Study the The in of the KCC 2006. is
out set
course as
requirements place rights. there
However, has such and in obtain all is of
put to
process necessary no aware a
Corporation rights and the will be able all failure have material adverse
that obtain such do
to to guarantee
may
a so
rights business, operations by Corporation's effect the financial these held and condition. Most of G6camines
on are
proposed Report incorporated by and be dealt the Combined Teclmical in with reference herein.
out set to
as are
parties Corporation place by rights. Others third the has obtain all held and in
put to process necessary are a
properties subject prior unregistered Corporation's that have The be been
transfers agreements to not
may or
by through undetected detected and affected defects. There be recorded title research title be
may
can or no
properties challenged impugned. Corporation's that the will be of title
to not assurance some or
exploitation Additionally, Corporation surveyed; rights the land which the holds mineral been have not
upon
may
subject challenge. therefore, such precise
and location interests be the of to may area
J•lining DRC Review
mining companies operating by mining The of the DRC initiated the licences held 61 review of in the government
a
including by Congolese Corporation. DRC, the The been function has headed review commission and
an a
looking independent
mining justify commission, and these these companies their commissions of the
to to
are use
mining operational legality and their each DRC. review focuses
licences in the The the of
presence process on
developments Corporation responded and the verification each The has information of site. agreement requests at to
corrmmnity operations the commission and has hosted projects. Corporation from 2008, the visit its and In to
a
required points outlining notification from the Mines the received written number that Minister of of DRC of a
further discussion.
(which Corporation held discussions with described The detail has G6camines further under "Recent in
are now
negotiations regarding Developments" above), the the in the of unification of Joint Venture Kamoto context
Joint the Agreement, Agreement, Agreement Release the the DCP Concession and transfer the and of Venture
mining rights exploitation agreed permits and However, definitive G6camines KCC. from
to
area over an
agreed. Corporation successfully documentation has been Gdcamines negotiate The failure of the and yet not to
regarding unification requirements documentation final address other the of the the Mines of Minister of of the to
or
Corporation's business, position. could have adverse operating DRC effect material the results financial and
a on
Hazards Environmental Risks and
Corporation subject
regulations promulgated The by activities of the environmental DRC and the to
government
are
legislation agencies generally prohibitions provides other from time time. Environmental restrictions and for to on
-18-
industry operations mining spills, produced emissions association releases of various substances in with certain
or
pollution. legislation imposition which environmental breach fines result in of and would result of such in A
may
penalties Corporation's have business. actions,
other enforcement which adverse effect the There
may or an on can
compliance regulations regulations with will involve that laws be these and future laws and
not
no assurance or
significant by expenditure Corporation adversely operations which affect results the financial of the the
may or
Coi-poration. condition of the
mining generally damage While holder title the liable the the
the for of in DRC is DRC environment to state to
any
a
joint
mining transferred), several basis the the where under the and of (on with transferor of title it has been
terms
a
indemnity agreed against provide the Venture, the G6camines Kamoto Joint Venture and DCP Joint has
to
any an
damage liability Corporation's processing the the associated in of of environment mines
respect to at
any any or
period during arising ownership. installations However, the from caused of G6camines' there be
guarantee
or no can
successfully indemnity indemnity Corporation that, that the able under such if will be claim such is
to
or even
successfully enforced, position Corporation
reimburse G6camines such will be in the of in
respect to
any a liabilities.
legislation evolving require enforcement, the DRC is in which will stricter standards Environmental and in
manner a
non-compliance, penalties
projects stringent proposed increased environmental fines for of and
assessments
more
heightened employees. responsibility companies degree officers, and for and their directors and There is of
a no
changes regulation adversely operations that DRC, environmental will affect future in
in the if not at
any, assurance
Corporation's properties properties. Corporation's each of the Environmental hazards which exist the
may on are
Corporation unknown Agreement the the Both the DCP Joint and Kamoto Joint Venture Venture present. to at
Agreement provide that respective after the of the joint end G6camines retain of the will ventures,
term
responsibility operation resulting newly environmental liabilities for the facilities for from its of but created not
liabilities.
•reignOperations
Substantially Corporation's operations Corporation's such, operations the all the DRC of in the and
are as are
exposed
political, levels operating various of and risks uncertainties with in economic other and associated to
a
foreign jurisdiction. include, high exchange These risks and uncertainties but limited
rates;
to, rates not
currency
are
inflation; renegotiation
existing licenses, permits labour of concessions, nullification and of unrest;
contracts;
or
policies; changes foreign exchange; political changing in conditions; taxation restrictions controls
and
currency on
regulations governmental require awarding
require foreign the of local
contracts to contractors
contractors to
or or
employ supplies purchase from, of, particular jurisdiction. citizens
or a
mining Changes, policies political adversely if shifts the in investment in attitude the affect
in DRC
any,
may or or
Corporation's profitability. operations Operations degrees varying regulations by be affected in
government
may
or
price production, but limited with controls, controls, restrictions remittance,
respect to, to, export not
currency
on
tbreign investment, legislation, claims, maintenance income of land claims local environmental land of taxes,
use,
people, safety. and mine water use
applicable comply strictly regulations laws, right practices relating with Failure local applications and mineral to to
loss, expropriation result reduction and could in of entitlements. tenure, or
predicted accurately these The and uncertainties be of various factors could have
adverse and cannot
occurrence an
Corporation's profitability. operations effect the and on
Operating Risks
perform the properties Corporation's To that KOL and fail DCP their functions of the extent operators to
as
operations efficiently, Corporation the of the be affected. may
Corporation metallurgical plant reliant
The is the Kamoto the which the and Luilu leased
concentrator,
to
on
are
Corporation by bring G6camines require capacity further production and which refurbishment work the to
to up
Corporation's
Corporation productivity needs. While the refurbishment has initiated the of these and assets to ensure
-19-
quality Corporation and, right criteria under the and Kamoto the Agreements the GEC Joint has Venture to
Corporation implementing delays experience
completing rehabilitate difficulties these thcilities the in and/or may
or
operating This Corporation's business, have adverse such rehabilitation works. could material the results effect
a on
position. financial and
Operating History Lira ited
Corporation history ability operating The limited has
be of projects and there its its
operate to
very assurance can
no
profitably. Corporation's depend ability The its properties ultimate will cashflow from its in
generate to
success on
appropriately employ experienced the and and future retain workforce. an
Logistics Risks
Corporation depends throughout
primarily neighbouring road rail The and links the DRC and countries
to
on
supplies materials, products long distances and and between its facilities African transport In ports.
raw over
some
currently
adequate these Corporation's operations. planned services the
transport In not support to
cases
are
changes addition, climate severely impact Corporation's ability seasonal the DRC the in
these In routes. to
may use
(via particular, rehabilitation, Nguba) requires road Kolwezi Lubumbashi the from it will
present
to
or severe a
disruption Corporation's during operations the
the road from (via annual The Lubumbashi Kolwezi to wet to
season.
Nguba, Nguba) by been has from Lubumbashi refurbished leg Nguba funded the Bank. World 114km The is past to
problematic usable but in while However, the rehabilitation rains. Lubumbashi the Kolwezi of road from is in to
there be
that the rehabilitation be sufficient that work will further rehabilitation will
guarantee progress,
can no
or
required. Corporation's be This could have business, material adverse effect operating the results and not
a on
position. financial
dependent Corporation either be The will also rehabilitation the of of the state-owned rail network DRC part
on
by operated (the Network") (through SNCC capacity "SNCC Rail and that network's increase in rail the
an
carriages) Benguela addition locomotives Angola. the rehabilitation of and of rail the Failure network
in
extra
or on
delay increasing capacity material Rail in rehabilitation Benguela SNCC the Network of the the
rail network in
or or
Angola Corporation's ability could restrict the either
operations supplies deliver materials and other its and to
to raw
products
Corporation, African result increased in and for the transport have material this will
ports, to to costs
or a
Corporation's operating business, adverse the position. effect and its financial results on
Supply Power
Corporation's depend operations delivery The reliable the continuous quantities and sufficient of of
to
upon
power
Corporation processing supply and facilities. the currently its existing While mines has of its certain
to
power
long-term Corporation's thcilities, operations, would, together, fully when taken the operational, if all have total
a
currently
requirement Province, Katanga taking of available in existing the in
of power account power excess usage
supplies and commitments. be that There sufficient future of be
will
available the guarantee meet to
power can no
Corporation's that, becomes, is, sufficient Corporation if needs available, purchase the
able will be to
power or or
commercially acceptable sufficient its needs for all. Failure
sufficient the
in to terms at power
power on secure or
Corporation's future have business, operating could material adverse the position, effect financial results and
in a
on
addition, electrical Project requires the rehabilitation the infrastructure available there of and risks to cun'ent
are
shortages, interruptions which could have business,
Corporation's material adverse effect the
power power or
a on
operations and financial condition.
Employment Labour Matters and
impacted employees by changes Relations with be relations, scheme labour in the of introduced which be
may may
governmental by changes legislation relevant Adverse the authorities. in such have
adverse material effect
may
a on
Corporation's business, operations result addition, the disruption financial of and condition. labour In work
or
by employees
Corporation of the its adverse could have material business stoppages effect the
contractors
or a on
Corporation. operations and of the
20
llealth Risks
mining maintaining skilled the HIV/AIDS, malaria and other diseases serious threat workforce in
represent to
a a
by throughout challenge HIV/AIDS, healthcare faced the industry Africa. other diseases malaria and
are a
Corporation members operations of its Corporation's the There that the be will lose DRC. in
not can no assurance
which have effect workforce workforce man-hours increased medical material adverse
incur
costs,
may on or a or
Corporation's operations. the
C•mpetition
opportunities throughout Significant increasing competition acquisition and for mineral result exists the world. As
a
large, capabilities competition, mining companies better established with substantial of this of which is with
some
exploit Corporation acquire rights and technical unable additional financial the and be greater to to
resources, may
acceptable. Accordingly, mining properties considers there that the attractive it be
terms
on can no assurance
yield Corporation operations acquire would additional commercial will interest in that result in
any
reserves or
operations. mining
Dependence Third Parties Relations with on
Corporation heavily dependant ability supplies provision its reliable of materials and of The is
to
on secure raw
third-party operations. suppliers Corporation services the from in order While has its certain certain out to
carry
currently place serviceg, for these materials and there be these in of that
guarantee arrangements
some can no
Corporation's supplies provision for the needs that will be sufficient future such services will of arrangements
or or
interrupted
altogether. required operations Corporation's materials for the be of the Some services
not
cease or or
commercially suppliers currently only available reasonable from limited number of
terms
one or on or are a
adversely providers. operations interrupted by delays supply, These be otherwise affected lack the
of in
may
or or
supply, by suppliers, by third materials change services the which materials of these these
party to terms
any or on
third-party by suppliers, by provide suppliers third and failure of made available
the services party to
are or
quality
change Group's requirements. Corporation supplier services that the the is forced of materials If
meet to
or a
services, Corporation such materials there that this the experiencing result is would in additional
guarantee not
or no
supply interruptions continuity other adverse business. also effect its There is that
guarantee costs, to
or some no on
adequate Corporation replacement timely
find services the will be able materials basis all.
to at or on a or
Dependence Arrangements Key Contracts and Business Potential on
portion large Corporation's part-finished products the be of sales derived from of its finished
A
may
revenue or
relatively particular, Corporation key small business has number of the
In arrangements. pursuant to contracts
a or
(the Arrangement") exclusive off-take with which entered into "Gleneore Off-take Glencore is arrangement
an
by delay under and Management Transactions". Failure the described "Interest of Insiders Material material in
or
perform obligations thereunder, these counterparties their breach of these arrangements
contracts to to
or or
by counterparties, Corporation's material adverse effect such could have
the arrangements contracts
or
on a
operating position. business, results and financial
of Volatility Metal Prices
industry mining that, quantities competitive The is there is if of and commercial mineral
assurance even a no
discovered, profitable development will market for their sale. The the exist and of Kamoto
resource a are success
primarily Projects projects dependent price and the be the of metals be DCP will future and there
on can no
prices Corporation's
properties profit. prices metal Metal be such that be that will the mined
at assurance can
a are
by subject significant beyond factors, fluctuation affected Corporation's and number of which the
to
a
are are
include, exchange deflation, control. Such factors but limited inflation fluctuation interest
rates, to, rates, not
are
or
foreign global regional supply demand, currencies, and the value United of the and and States dollar in international
speculative production political conditions, mining and improved economic increased and activities and due
to
production
price and widely methods. The other base fluctuated of cobalt and has and metals in recent
copper years,
price development production declines could future of serious continued and commercial from the
cause
impracticable properties Depending Corporation's be price the and and uneconomical. of cobalt and
to copper on
-21
mining projected existing planned operations metals, sufficient and the other cash flow from and be not
may
Corporation's development. production Corporation forced Continued and the could be discontinue future from to
properties dependent prices adequate Corporation's properties cobalt that
is and make the
to
copper
on are
financing (price hedging) production. require Project forward of sale economic. covenants copper may some
plans significantly Furthermore, prices using calculations life-of-mine and cobalt lower and metal
copper
reserve
properties Corporation's mining material could result xvrite-downs the investment in and increased in of
charges. amortization, reclamation and closure
Corporation's adversely affecting condition, declining addition the its estimates and financial In to
reserve
operations requiring impact by feasibility commodity Corporation's prices the the of of
reassessment assets.
can a
required result financing be the decision Such of be trader
management
arrangements reassessment
may
may
a a or
particular
Corporation's ultimately project. related projects economically determined be if the Even
to to
are a
viable, delays interrupt conduct operations the need
substantial until the such
to reassessment may may or a cause
completed. be reassessment can
Applicable Non-Compliance of Quality Standards Risk with
marketability price by achieved products produced Corporation the for cobalt The and is the and the
copper
quality dependent products. particular, products of these the order market certain In in of
its LME
to
copper on as
Corporation products Grade require certification the the will A
from LME that the relevant "A"
copper, copper are
products. grade
Corporation There be that will such certification time the obtain
in
to
assurance can
no commence
marketing expected products
delay could Such margins its all. lower the failure result for in
at
copper as or or
Corporation products. its or
C•wrency Risk
Corporation's expenditures operations DRC, Africa, incur dollars and the local The US in currencies the South in in
principally operations issuing Canada. equity the and Revenue from US dollars. The U.K. raised is in ftmds from
financing
dollars. project expected debt funds raised Canadian be from and in be US Future in U.S.
to to
are or
are
foreign Corporation subject cm•cencies, result the these dollars. of of different the is As
to
currency
use a
materially fluctuations, operating position and affect financial which results. its may
Requirements for Capital Additional
capital Copper mining processing complex intensive, plans Corporation cobalt expensive. and and is The and
to
exploitation develop financing operations existing commercial and mines. Substantial its additional will be
at restore
required projects Corporation successfully implement is undertake the if such and if it its is strategy. to to
addition, implementation Corporation provided contingencies while has for budget the in In of the its for the
Projects and Projects, global mining industry subject
potential the escalations DCP Kamoto result is of
to cost
as a
commodity cobalt prices demand for the level of metals, other base
and other factors. There and be
copper, no can
industry being that other will result escalations and factors in additional guarantee incurred that cost not
costs
or
budgeted adequate, expenditures funding required by be and the will additional this increase the of
amount
may
Corporation. Corporation given the will able No be that be additional finance that raise the it
to
may assurances can
require anticipated
operations acceptable Corporation for
Corporation future its If the the all. is
to terms
at
on or
unable funding, funding satisfactory obtain such Corporation's unable is obtain the such
to terms, to
or on
implementation Projects adversely Projects the materially of Kamoto and the DCP be affected. may
Liquidity Financings Concerns Future and
Corporation (including 2008, $1,298.9 impairment loss the properties million incurred of In mineral and the of net
a
million). $1,544.4 31, Corporation inventories of $1,351.6 2008, December the had deficit As million and of
at
a
a
capital deficiency working January completed Corporation $69.5 12, 2009, Facility million. of On the the New
$100 financing. which During million additional included 2009, Corporation first half of requires the the of
an
financing additional US$250 million equity requirements and/or debt in ongoing cash its fund estimated meet to to
22
capital operations expenditure Options currently being pursued by potential and find investors commitments. to
are
Corporation. Assuming equity, Facility US$250 million raised debt full will the the is in and/or the of New amount
mandatorily Corporation's equity. However, converted be that will be there the into activities be
assurances can no
significant Corporation's ability going and result there is doubt the successful sufficient continue
to to a or as as as a
concern.
Risks Insurance and Uninsured
generally, subject including Corporation's business is number risks and hazards adverse environmental The of to
a
disputes, political instability, unexpected accidents, conditions, unusual industrial labour civil and unrest
or
ground slope failures, geological changes regulatory conditions, cave-ins, natural the environment and in
or
phenomena earthquakes. conditions, damage result inclement weather floods Such could such and in
as
occurrences
properties production personal injury damage
facilities, death, Corporation's environmental the mineral
to to
or or
properties delays legal development mining, possible liability. properties others, the losses of in and
monetary
or or
political by Corporation intend obtain risk insurance which will The investments loans the does and guarantee not to
against expropriation, Corporation companies
restrictions, risks transfer breach in the DRC the of of contract, to
war
Corporation against civil disturbance. The will and other such maintain insurance certain risks in protect to amounts
potential However, considers reasonable. its will all the operations. it associated insurance risks with its
not
as cover
Corporation economically premiums.
feasible also be unable maintain insurance these The risks to to at
may cover
adequate liability. resulting be available be Insurance continue
not to not
to coverage may may any cover
or
against pollution exploration Moreover, risks such other hazards insurance enviro•maental of result and
as or as a
generally production
Corporation available companies industry acceptable mining other the is the in
not to to
or on
subject Corporation might liability pollution also become hazards which The be
other for terms. to not
may
or
against against Corporation because insured which the premium insure other elect of
costs not to
may or or reasons.
Corporation significant these the Losses from
could have material adverse incur that
to events costs
may cause a
performance operations. effect its financial and results of upon
Company ltolding
holding substantially Corporation operating operations, The of and holds all its
is that conducts all its of
company a
through judgments against subsidiaries and obtained the subsidiaries of
in Ontario need
assets, to
may
more one or
lengthy subject enforced outside be
delays be additional defences
of Ontario and enforcement in
to
may or as a result.
for DO•ficulties Enforcing Foreign Bringing Jurisdictions in Judgments in Actions and Investors
organized registered Corporation The the of Bermuda and head and office is under laws its is in Bermuda. The
majority Corporation's form, officers, directors and and the information all of the named in this of annual experts
America, portion portion reside outside and substantial their and substantial of of North all of the
assets,
or a a
Corporation's located result, outside of America. investors Canada
North it be difficult for in As
assets, to
may are a
bring directors, against officers who action difficult resident in be also Canada. It for
experts not
may an or an are
jurisdiction predicated judgment investor obtained enforce in Canadian residence of another of
to
court court
a a or a
liability provisions the civil equivalent
laws federal securities laws other Canada the of other of of laws
upon
or or
jurisdictions against outside those Canada Corporation.
the persons or
Litigation Risks
legal proceedings. Corporation Corporation The be involved from time time in various While the believes it to
may
unlikely proceedings that the such
Corporation's is final material adverse the of will have effect
outcome
any
on a
position operation,
substantial, results defence settlement financial with claims of and be
respect costs to
or even can
uncertainty litigation that inherent of the there have Due the be that the
merit.
to
process,
no assurance can no
particular legal resolution of will Corporation's have material adverse the
effect future cash
not matter
any a on
flow, operations financial condition. results of or
Adversely Affected Corporation's by Beyond Common Share Price be the Factors Control may
-23
volatility companies based mid-cap experienced of small have the factors substantial and often in Securities past,
on
performance companies the include unrelated financial of the These factors involved. prospects to
or
developments globally perceptions market macroeconomic local markets and and of the attractiveness of in
significantly changes likely particular Corporation's price by industries. The also affected share is be short-term to
Corporation's prices operations reflected the cobalt results of in
in the financial condition in
copper
or or or as
earnings price Corporation's quarterly the performance Other unrelated effect
factors that have
to reports.
may
on an
concerning following: analytical the Shares include the available the Common the of investors of extent to
coverage
Corporation's capabilities be limited banks with discontinue business of if investment research their
coverage
may
trading lessening general Corporation's Corporation's securities; market the in volume interest in the securities
a or
ability significant Corporation; the trade and the affect investor's numbers of of size of the
securities to may
an
public ability Corporation's Corporation's float the limit the institutions securities.
of invest in As
to
may
some a
factors, price point accurately given these of market Shares time result of the of the Common in not at
any any
may
Corporation's long-term litigation brought against companies the often has value. reflect Securities class action been
following periods volatility price Corporation be the market securities. The the future in of their the of in target
may
litigation. litigation damages could and management's substantial and divert similar Securities result in of costs
and attention resources.
Listing of TSX Continued Review
conducting Corporation January listing 2, 2009, the advised the would be continued review. the TSX that it If On
a
Corporation by longer listing requirements TSX, the found of the TSX the minimum the
to meet
was no
Corporation's trading be delisted the which the securities
could have adverse affect from TSX material
may
on a
particularly price Shares, listing Exchange the if alternative of Common of the securities the TSX Venture
an on or
exchange
another stock could be obtained. not on
Con.flict of Interest
Corporation of also number directors directors and/or officers involved companies of the A of other in the
serve as
exploration development properties. obligations and result, conflicts of natural the arise between
As
may resource a
Corporation the companies. of these individuals and such other to to
PROJECTS MINERAL
description properties Corporation, together the material the with of of For mineral mineral and
a
resource reserve
description updated plan, (i) and of the mine estimates made Combined which Report reference is the Technical is to
incorporated by
www.sedar.com, (ii) reference herein and is available the SEDAR and executive
at
summary on
Combined Report, contained the of hereto
Technical in which is attached Schedule "B".
copy a as
LOCATION PROPERTY DESCRIPTION AND
and The DCP located south-eastern the KCC concession in the of the international border DRC
part
areas are near
(formerly Zambia. KCC and province Shaba) with The located within Katanga DCP and concession the of
are areas
the Kolwezi. Lubumbashi, capital kilometres district of about north-northeast Katanga It is situated 220 of of the the
and and Province between kilometers from the 2 of Kolwezi. 10 nearest town
Description mineral of tenure
rights" KCC
rights benefiting mining cun'ently by The
•vhich originate from granted KCC is from Concession the n°C23 DRC a
G6camines. State to
promulgation Code, Mining exploitation exploration of miinng rights the Prior the the G6camines' for and of to
cobalt granted
and mineral under associated C23 regime substances Concession under the of Order- copper, were n
24
relating general legislation hydrocarbons and renewed under the 1967 May for mines and 11, of 67/231 Law No. to
hydrocarbons. April relating general legislation 2, regime and 81-013 of 1981 for mines of Order-Law No. to
Mining n°195/CAB/MINES-HYDRO/01/2002 Following 2002, of the Code Ministerial Order into force the in entry
rights recognised currently belonging mining Concession valid August G6camines and 26, dated C23 2002
to
n as
mining Mining rights the titles under the Code. of the transformation
into transformed such As part
process,
areas
("EP") permits regime exploitation EP525, and by divided into under the former covered the Concessions
were
being originally having expiration April expiration comprising the date 3, 2009, carr•s of issued date of 400
was an
Concession C23. n
Exploitation Mining Mining the the permits under with the Code renewable in accordance of Code for terms are
periods of 15 years.
subsequently carrOs, cobalt and associated mineral substances. reduced 297
EP525 EP525
to
copper, was on
covers
exploitation permit Mine, Kamoto, land under The which the December this the Kamoto the 2005. 30
covers area on
deposits located, Mine, Dikuluwe, Mashamba well the the and and of the facilities Kamoto West T17 East
are as as
Hydro-metallurgical plants. and the Luilu Kamoto the DIMA concentrator, concentrator
exploitation Exploitation permits right exploration its holder the exclusive of and works mineral grant to to out
carry
granted. right mining been This has of for which it the facilities for
construction matters
necessary
covers
products sale, exploration, compliance the commercialisation and wood and
the of free of for in water
resources,
use
corresponding legislation. with
("contrat d'amodiation") Agreement lease the Joint Venture and Kamoto Pursuant N contract to
a
(the granted Agreement), by dated 716/10518/SG/GC/05 October has been 2005 KCC Lease G6camines 18 KCC
a
authorising mining by by rights exercise of lease the held G6camines the covered KCC the under EP525 the part to
Agreement). (subject Mining the Agreement Code and the The Lease Kamoto Joint KCC Lease KCC Venture to
by made of renewable mutual with the Agreement accordance the is tbr 30 in of
agreement term terms years
a
Agreement. Kamoto Joint Venture
February by By 2006, reduced Minsterial 1020 the dated Order N covered 176 carr•s and the 17 EP525
to
area was
multiple
deposit covering converted The situated balance of into 525 the is carrOs EP EPs. T17
two
area now on
EP4958. within
September split By N°3187/CAB.MIN.MINES/01/2007 2007, EP525 the Ministerial Decree of 19 further at
was
permits, namely consisting containing different G6camines of carrOs into EP525 of and EP884 20 request two most
of the balance.
only mining view that the Kamoto, the leased the of the G6camines has taken be KCC
to to
zones areas
were
deposits. by Dikuluwe, West, and this, Ministerial Mashamba and East of Decree N T17 In consequence
reduced, 2007, 3308/CAB.MIN.MINES/01/2007 G6camines has further of 28 December of had the EP525
area
approval, Although
perimeter together prior carr•s, reduced without cart&'. EP525, the of 13 KCC's 13 to to
as
EP4958, deposits mining Kamoto, Mashamba and and additional with the East in
T17
two
zones, covers cartes
required
dumps, tailings. subject and which has with for This is of discussion been the
storage matter
a areas are
agreed principle
"Proposed and has G6camines for been in below time be resolved under
out to set
as some
Amendments".
Although clear under article of the Agreement that G6camines entitled it is 6.9 Kamoto Joint Venture is grant to not
having granted prior rights third the without obtained KCC's in concession KCC KCC is
party consent, to to
area a
granted parties rights by that G6camines third which maintains covered the has certain KCC
aware
areas over are
operations. of these has KCC Agreement interfered G6camines has Lease but date with KCC's
grants to
none now
agreed exploitation covering deposits principle permits that the be addition the in transferred KCC. In it is to
proposed (as Necessary below) equipment by defined that the Surfaces installations and from G6camines and rented
following KCC, provided rights. DCP, the be with will free KCC from third party to merger
25
changes by disagreement made Given the EP525, the Gdcamines therefrom, and with KCC which resulted the to
corresponding
by perimeter registered the Agreement covered KCC the Lease has been with CAMI. not to area
Agreement, agreed Concession Release Pursuant the G6camines and would release the KFL that KCC Dikuluwe to
deposits covering and Mashamba EP9681, of West which had contained in 7 removed from been
an area carres
the above mentioned EP525 3308/CAB.M1N.MINES/01/2007 Ministerial Decree N pursuant December of 28 to
Following release, EP525, deposits carrOs,
only this 2007. reduced the of 13
and Mashamba Kamoto to
as covers
East.
agreed (i) Agreement, of the Release G6camines Concession As covering transfer KCC the part EPs the to to
areas
(ii) leased the Agreement under and KCC Lease good functioning KCC would that sufficient for the receive
an area
including operations, tailings. of agreed for dams its sites parties and the
also for The shall that be
amount
space
an
paid transfer,
principle which
agreed for this by is
be covered in the of the de amount to porte amount
now pas
below). (see further payment
renewed August EP525 has been 2022, until 29 Ministerial 3180/CAB.M1N.MINES/01/2007 Decree °. N pursuant to
August April and of 30 been 2007 EP4958 has renewed until 3 2024 Ministerial Decree pursuant to
September N°3215/CAB.MIN.MINES/01/2007 of 2007. 21
railings exploitation permit has G6camines covering by N ca•7-Os 9683 the
PER covered the 13 EP525
a
now
although tailings specific old there this would
production which interfere with
this from
no are area on area.
the Agreement, addition has, KCC In G6camines Lease the Kamoto Joint Agreement, leased Venture pursuant to to
rights
processing KCC exclusive existing all (including facilities KCC-concession the
the
Kamoto to to
use
on areas
plant and facilities, and together Dima Luilu their surface), with all and infrastructure and all concentrators, mobile
equipment. agreed principle has G6camines been with It that all in installations and infrastructures within the
perimeter of required, KCC-concession the by the (following be rented shall G6camines KCC its to extent
to
areas,
being DCP) by agreed rental royalties with with the covered between G6camines and KCC. merger
Rights Mineral Surface KCC: and
Cu, Co and
associated
03/04/2024;
blocks
2
T Mine 17
EP4958 minerals KCC
1.70km renewable
of Use +
Surface
Cu, Co and
and Kamoto blocks, associated 13
03/04/2024;
Mashamba East minerals EP525 km KCC 11.04
renewable
Mines Use of +
Surface
rights DCP
the agreed Agreement, DCP Pursuant G6camines Venture Joint exploitation permits transfer certain DCP to to
to
rights and lease and DCP exploitation contractual certain
facilities. permits These certain
grant to
a
over cover
cobalt and exploitation substances. associated mineral permits comprised, land under The these the time copper,
at
execution, of deposits and covered 32 carrOs and the KOV, Kananga cobalt and of Tilwezembe. copper
26
following permits assigned by ownership exploitation Fhe the have been G6camines DCP: of to
assigned Exploitation by assignment deed dated Permit 4961 G6camines DCP of 13
pursuant to to
n was a
Exploitation cart(s, January registered 2006, the with March This CAMI 2 2006. Permit consists of 10 on
comprise which the KOV area;
assigned by Exploitation assignment G•camines deed dated Permit 4960 DCP of 13
pursuant to to
n was a
registered Exploitation carr(s, January 2006, with the March This CAMI 2 2006. Permit consists of 13
on
comprise Kananga the which area;
by Exploitation assigned 4963, assignment Permit G6camines DCP deed dated of 13
pursuant to
n was a
registered Exploitation carr•s, January 2006, with the March 2006. This of CAMI 2 Permit consists 9 on
comprise Tilwezembe which the area,
(together Exploitation Permits). the DCP
April Exploitation
expire Application 2009. has been made the renewal DCP Permits 3 for their until 2024 All on
this and is in progress..
application only expressly number The for renewal of for limited
EP the be refused of in
set out
may
an a reasons
particular: including Code, in
charges, Failure surface to pay
adequate remaining demonstrate Failure to resource;
capability and; financial titleholder Insufficient the of
update Failure environmental documentation. to
principal ground by
the be forfeited due failure titleholder The relevant for which EP surface
is the to to may
pay an
1.
mining Mining titleholder fees due the Code liable annual carr( is
surface fees A pursuant to to per per area pay
carte}.
has, granted rights rights G6camines the Agreement, DCP exclusive the DCP Joint Ventm'e pursuant to to
to
Exploitation together ancillary processing
existing Permits, the attached facilities sites DCP with the the to
to
on
plant, plant electro-refining Group well the DCP
known West the concession
concentrator treatment
areas,
as
as as
"Siege"
P2", Group hydro-metallic "Luilu West, the installations known the and the in extension sites Luilu waste
as
together equipment plant, KZC, the other the Kov surface, infi'astructure and with all their treatment at
conveyor,
equipment. mobile and all
principle agreed currently by has been with G6camines in that all It other installations used within the DCP DCP
Exploitation permits
by Necessary required, Surfaces, the shall be the G6camines rented KCC
to extent to
or
(following by DCP) being royalties agreed G6camines, with with its rental covered the between KCC and merger
agreed has that the Kolwezi Concentrator will DCP. been G6camines, released be for the It and that benefit of
employees. Gdcamines will former its re-engage
and of the Art. 286 289 Code
-27
Rights DCP: Surface Mineral and
Cu, Co and
associated
03/04/2009; blocks,
9
Tilwezembe minerals Mine EP4963 DCP
km 7.64 renewable
of Use +
Surface
Cu, Co and
associated
blocks, 03/04/2009;
13
Kananga Mine
EP4960 minerals DCP
krfl 11.04 renewable
of Use +
Surface
Cu, Co and
associated
03/04/2009; blocks,
10
KOV Mine EP4961 minerals DCP
km 8.49 renewable
Use of +
Surface
Proposed Amendments
connection with the In below and DRC Commission Review referred of of the in
to consequence
merger as
Katanga PLC, G6camines, Limited, Nikanor and KCC, currently finalizing DCP and KFL the GEC
are
negotiations proposed Amended for the Agreement JV reflect the KCC of DCP into which will to
merger
amendment result Agreement the in the Kamoto Joint Venture and termination of the DCP Joint Venture to
agreed Agreement. discussions, of these G6camines, has been bet•veen it As KFL Limited and GEC part
(subject the Agreement) final in that: Amended JV agreement to
(a) (comprising carr6s) (comprising whole of The and EP525 13 of 4958 2 carr6s EP part
containing deposit) following completion the be transferred T17 shall the KCC of to
Kamoto, deposits The with Mashemba and DCP. East T17 and extensions of
merger any
deposits perimeter these
which the within the of be EP525 and 2 carr6s of 4958 EP to
are
transferred, shall be for the sole benefit of KCC.
(b) Exploitation completion following The be transferred DCP shall KCC Permits the of to
(being addition, with
Kananga of DCP. In carr6 the EP7044 of
extension
merger one an
deposit)
by (following merger) be transferred
shall G6camines the KCC such to
once
holder tailings, EP652 has released the of be transferred carr6 earlier from its if to or
agreed KCC has the holder of EP652. grant to easement to an
(c) merged perimeter The KCC/DCP of the will concession contain the surface
area
operation for the including the of KCC, activities of the current
necessary
proper
spaces
tailings dams, produced by the future for the plants the KCC, of activities and the current
premises, (the other the Necessary Surfaces). well
storage necessary areas as as
agreed Necessary has been that the It by Surfaces will be sourced from 8841 held EP Gecamines and
deposit. granted close the carr6
from T17 enable Easements shall be establish KCC and to to to one
-28
commission, technical comprising operating ad hoc facilities tbr the KOV belt. An maintain
KCC/DCP, consider determine the of the and shall and G6camines representations from
source
determined, fund they have been KCC shall Once Surfaces Necessary and easements.
an
surfaces identified contain mineral
independent whether the determine contractor to any
reserves.
multiple discovered, converted the relevant be surfaces shall into Provided
reserves no are
required) (or, close (where exploitation permits and shall transferred in the carr6 of the be to
case
following the leased) DCP. Should discovered be in KCC,
its with T17, to merger any reserves
replacement shall be and shall surfaces, the transferred KCC
identified
count to reserves as reserves
Agreement. the Concession of Release under the terms
agreed winding liquidation
proposed has been it that the of the amendment
of As part upon up
or
further mining rights of KCC shall G4camines without consideration. and titles KCC the to revert
Mining DRC Review
by (the "Commission") April formed DRC Government review 2007, comlnission the In
to
was
a
(60) by para-statal companies Congolese approximately mining entered the of sixty into agreen-lents
Agreement Agreement DCP included The Kamoto Joint and the Venture Joint Venture government.
were
reviewed. mining in the be agreements to
public provided conclusions The in its made in November 2007. Commission its report
February by Ministry objections and notified the of DRC Mines of the KCC and DCP 2008 11
were on
regarding partnerships requirements their G6camines further the above-mentioned November with 2007 to
report.
understanding July entered memorandum 2008, G6camines and •vhich into of under certain KFL In
a
agreed agreed joint
parties be reflected amended the in and amendments agreement
to to venture were an
the and DCP. of KCC merger
Ministry renegotiations the of of the and/or August 2008, DRC Mines issued reference for In terms
by mining entered and termination of the into KCC DCP. contracts
Following meetings during 2009, the and the number the of of of last of first 2008
quarter quarter
a course
currently parties negotiating the the Amended the final of Amended Until the Agreement. JV JV terms
are
effective, parties operating existing finatised the joint Agreement under is and becomes the venture are
agreements.
Royalties and other fees duties
payable Royalties (a) the State DRC to
mining exploitation subject royalties mining title which calculated the basis The holder of is of
to
are a on
analysis concerning quality sales of the commercial the of minus the the control of transport, costs
amount
product relating sale, royalties and the due sale for insurance sale transaction. The the of
costs to
upon are
product. mining royalties The 2% non-ferrous metals. the for are
rights payable (b) State Surface the DRC to
Mining required rights Code, US$5 Article the KCC and Under of
198 DCP surface fees of to
pay per are
exploitation permits. US$424.78 carr6 for hectare
per per year or
exploitation payable by mining right Additional fees holder surface DCP the KCC and of
to are as an
Mining the cenn'al of US$0.08 of DRC Article the the 238 Code of pursuant government to rate at per hectare.
29
payable Royalties (b) Gdcamines to
equipment of the and shall G6camines
Agreement, for the Under the Kamoto Joint Venture KCC
pay
use
proceeds during
(3) realized equal (2%) the the annual first ttnee facilities of sales
percent to net two
sum a
(1.5%) proceeds periods and and half sales of the thereafter.
percent net one a
Agreement, shall G6camines for the transfer of the DCP Under the Joint DCP Venture DCP
pay
equal Exploitation ancillary processing the and installations Permits and the sites of
to two
sum use a
(4) during (2%) proceeds sales the and
the realized first of four and half
percent percent net
years one a
proceeds (1.5%) thereafter. the sales of net
agreed provided royalty equipment by that the facilities Under the MOU it for and G6camines
rate
was as
agreed depletion for will has been in well increase from 1.5% 2.5% of
It
to net
ore as reserve revenues.
principle royalties equipment consumption that facilities these will all of the and and the and
cover use
deposits. agreed depletion the of revenues" been be defined the basis calculation "Net have
to
as same as
namely Mining quality royalties Code, transportation the sales less control of under insurance costs, costs,
marketing and the costs. costs
(c) de Pas porte
("entry payable porte" premium") by de "pas shall be KFL/GEC G6camines the for A payment to to
access
US$140,000,0000, project.
completed the The shall be the which will total of be payment amount
as follows:
by previously (i) being paid loan, US$5
million Gecamines GEC converted de and into
to porte
as pas a a
non-refundable; therefore
paid (ii) comprise (a) by US$135 by million be This paid US$ million will be of 24.5 KFL. to set- to
way
by the granted against subscription the advance be off KFL Gecamines for the of of payment
to amount to
(b) paid price (as above); described days US$5 million amended be of the within into and entry to ten
joint (c) US$10 restated basis and million annual between and and 2011 2009 agreement;
venture on an
US$15 million between annual basis and 20t5 with final US$15.5 2012 2016 of
in payment
on an a
parties agreed paid million.
have that The these shall be without deductions
off. amounts set any or
will replacement further de payable
be No the release of in the for respect porte compensate to
pas
reserves
however, brought Dikuluwe and Mashamba of West; by Merged additional G6camines the tonnage
to any
deposits fully compensated released have after JV
been the incur will US$ de of
payment porte pas a new
35 of torme per copper.
(d) requirement addition there is In duties and
the law. in accordance with to customs taxes pay a
-30
DIVIDENDS
Corporation paid
incorporation has Shares Corporation dividends its The and Common since the
does not
no on
anticipate paying dividends Shares foreseeable future. Common for the of Payment its dividends will future
any on
taking including Corporation's be factors, the into discretion of Board after the the operating at account many
anticipated results, financial and needs. condition and cash current
DESCRIPTION OF SHARE CAPITAL
Shares Common
capital Katanga authorized share of The 1,000 consists of $12.00 shares value each and
with
par
common a
5,000,000,000 with hereof, $0.10 value of
shares the there each. 206,320,802 date
As
at par common a
were
outstanding. Shares Common issued and
meetings Each Common Shareholders, participates rateably carries Share all of dividend in declared vote at
one any
by right proportionate the
the directors receive and carries share Katanga of the of available for to
assets a
liquidation, distribution winding-up of Shares the holders Common in of dissolution Katanga. of The
to event
a or
pre-emptive holders rights. have
of Common Shares conversion
no or
Notes
following outstanding The of the
Notes subject provisions date of this the AIF. The
of Notes
the Note
to
as are are
Development Indenture. Katanga "General See Developments" of the Business of 2006 and "Material Contracts".
Principal Amount Maturity Notes of Date
CDN$124,835,950 30, November 2013
Warrants
following
outstanding The of the date Warrants exchangeable of this The
equal Warrants
AIF. for
are as are an
prior
Expiry number Common Shares of the price Date the of exercise Share Common payment in to
upon
per
accordance of the with the Development Indenture. Warrant See Katanga "General the Business of of 2006 terms
Developments" and "Material Contracts".
Number Warrants of Exercise Expiry Price Date
3,966,400 CDN$8.50 20, November 2011
-31
KATANGA FOR MARKET SECURITIES OF
symbols trading KAT, posted under the TSX the Shares, and for listed and Warrants The Common Notes
on are
high prices respectively. and following low trades and the historical tbr The table KAT.WT, and KAT.NT sets out
reported by respectively, Shares, monthly trading the TSX for Warrants, volume of of the Common Notes and the
as
applicable 28, began trading periods and the Notes indicated. The Shares the TSX 2006 Common June the
on on
began trading 20, the November and TSX 2006. Warrants
on on
TSX Trading Volume Price and the on
Warrants Common Notes
Shares
• .Low • Volume Volume Volume Low Low
•igh (CDN$)
• • • • •
10,187,084 293,300 98,100 January 96.00 11.50 7.60 18.90 1301 99.90 2008
568,400 6.10 8,243,401 51,500 February 10.64 12.26 98.00 95.00 17.57
3,605,600 4,750,804 42,600 9.60 6.59 March 12.51 98.00 95.50 17.24
3,677,0.13 437,500 April 54,900 96.01 8.10 6.60 15.79 12.84 99.95
8,939,869 2,650,200 120,900 May 95.00 7.14 4.13 13.56 98.10 10.22
4,139,028 3,554,300 153,700 6.10 12.68 96.00 7.50 June 14.89 99.95
9,073,420 312,000 110,100 3.45 July 7.65 95.00 5.98 13.40 96.00
4,591,694 52,000 87,200 3.19 August 11.99 8.15 95.01 90.01 4.79
574,800 September 10,299,424 116,500 1.20 93.50 11.50 4.75 89.00 4.17
421,100 14,252,929 657,100 0.255 October 5.20 1.13 92.00 84.00 1.21
13,509,245 464,000 410,000 0.22 0.02 November 1.58 83.50 50.00 0.23
8,428,2020 2,301,000 530,600 December 0.015 0.26 0.80 58.00 50.00 0.07
2009
January 484,700 6,413,415 73,700 0.57 0.30 50.00 0.075 0.03 54.70
February 4,118,192 2,390,200 47,000 0.03 0.34 59.00 45.00 0.05 0.49
Sales Prior
Facility Development discussed Katanga the "General Business Reference is made under of of the Recent New to
Developments-Amendment Facility". of and Restatement Former Loan
DIRECTORS AND OFFICERS
Occupation Holdings Security Name, and
following principal forth and Corporation, directors of the their The table the executive officers present sets
occupation, holdings became the each director
and/or executive officer their beneficial of month and and year
a
meeting Each director holds the Shares. until shareholders the office close of the first annual of of Common
Corporation following each election their vacated with the director's unless office earlier accordance is in
by-laws. Corporation
No. of
Common
Shares
beneficially
Name, Province State owned, Month and Year &
or
principal Country occupation Residence Present of and if different from office controlled became
or
position Katanga
principal occupation with five Director/Officer held and for past directed the years
(3) George Officer, George Chief Forrest November, Executive A. 18,800,000 2005 Forrest International
Lubumbashi, (private October, industrial Democratic S.A. company) since 1996.
Republic Congo President, Administrator-Manager, Entreprise of G6n6rale
33
No. of
Common
Shares
beneficially
•ame, State Province & owned, Year Month and
or
Country principal occupation and Present different of Residence became if from office controlled
or
Katanga
principal position with occupation and for the held Director/Officer directed five past years
(3) (6) (6) istotelis positions Glencore Mistakidis January, Various with International AG since 2008 Nil
alchwil, directorships July 1993, Switzerland including Glencore of
Mopani AG, AG, International Copper Glencore Mines rector
Recyclex Limited, and S.A. S.R.L. Portovesme
(6)
Corporation October, Executive Interim Chief Isaacs Officer of the 2008 Nil •'ven
Switzerland since October 2008. of Glencore Finance Director
g,
Chief Executive
erim
September
from AG 2003 of Director present. to
"ricer (
Mopani Copper Mines Plc before from 2003 to
October 2008. Alternate Minara of Director
from before December Limited 2003 2008 to
ck Brodie Corporation Chief Financial Officer December, the since of 9,617 2008
ndon, Kingdom Corporation United the Director, December 2008. of Finance
Financial Officer ief 2006 December from November Chief until 2008.
Cinergy Financial Global Officer Resources from of Inc.
2006. November 2004 until November Head of Finance
Trading Cinergy Global from November 2001 Ltd. at
October until 2004.
Operating Henderson Interim Chief Corporation October, Officer the of 2008 Nil
n
rth, October Operations, Scotland since of 2008. Executive Director
Operating Chief erim Glencore Africa March International AG from 2008 at
ficer Copper Ol Chief Mopani Executive Officer of present. to
from January 2002 until March Mines Plc 2008.
Dhir Vice-President, Development Corporate Company January, Anu and 35,000 2006
ndon, Kingdom Secretary January, United Katanga since of 2006. Between
Corporate ee-President, Vice-President, 2006, and Development Business 2003
velopment Company Capital and of 2003, Partners CC Inc. Between and 2002
Vice-President Tengtu Corp. International of :retary
Note:
{l) Member of Audit Committee. Win'dell is the Audit Committee. Chairman of the Mr. the
Compensation (2) Member Committee. of Compensation Mr. Berber is Chairman the the Committee. of the
Corporate (3) Member Committee. Governance Corporate of the Oke is the Governance Chairman the Mr. of Committee.
Health, Safety, (4) of Social Member Committee. & Environmental the Oke is the Chairman Committee, HSS&E of the Mr.
by (5) which Held in director. of entities Mr. Berber
respect
serves as a
Oversight (6) of Technical Member Mistakidis Chairman Committee. Oversight the Technical the of Mr. is Committee. the
Orders, Cease Bankruptcies, Trade Sanctions Penalties or
director officer: executive No or
(a) is, been, has date of this the AIF, within director, before the date
AIF, of this
10 chief at years as or
a
(including officer chief executive financial officer of that,
Corporation) the while that
company or any
capacity; acting in that
person was
subject (i)
the trade similar order of order
denied the that
relevant
was a cease or company or an
exemption legislation,
period under
securities for than of 30 consecutive
to any access a more
days; or
subject (ii)
resulted, director, that the after chief
financial
executive officer chief event to an
was or
officer,
ceased be director chief officer, chief executive officer in the
financial
to
or a company or
subject being
of the trade similar order order that denied the
relevant
a cease or or company an
-32
No. of
Common
Shares
beneficially
Name, Province State owned, Month & and Year
or
principal Country occupation of office Residence controlled and Present if different from became
or
principal Katanga occupation position five with Director/Officer directed held and for the past years
October, Counsel Malta since 1997. Director SPRL Forrest
Delegated Administrator, and Cimenterie President de
April, President Lukala SARL since and 1992. Counsel
Delegated April, Administrator Interlacs since SARL
Delegated Administrator, Counsel and President 1992.
Agrifood SPRL, since and August, 1991. President
Manager Administrator- Leveque New Baron
Afrique International November, SPRL since 1989.
President, Counsel Medical de la Communate Centre
November, President, since Counsel Miniere de 2001.
March, SARL, Musoshi Kinsenda since 2003 2005. et to
President, Compagnie Katanga Sud Counsel Miniere du
June, Copper since 2003. President SPRL Kamoto
Company October, Director, SARL since 2005. Kamoto
Operating November, Limited since 2005.
(•) (a}(6) positions Malta George July, Various senior with D. Forrest 419,000 Forrest 2006
Enterprise Lubumbashi, International Democratic Gdn6rale Malta and S.A. Forrest
Republic Congo of October from 1997 date. SPRL to
Director
(I)(2)(3) Wardell Robert Corporation the Nevada July, of and of Allied Gold Director Nil 2006
Corp., Toronto, Phoenix Coal Ontario Nuinsco Inc. and Resources
Vice-President, Director Limited. Chief Financial Finance and
Victory February 1,2007 Officer of Nickel from Inc. to
2008. Consultant December June, from 2006 to
February 2007 and May, Senior from 1986 Partner to
Touche, 2006, Deloitte & LLP.
(4) Stoyell Hugh Siyanda (Pty) Consultant Coal Limited January, from 2008 Nil
to
Republic Johannesburg, September 2006 of Non-executive Director of present. to
September Mining Africa South Sentula Limited from 2005
to
(Chairman) Mining Retired Director Duiker in from Limited present.
February serving 2003 after Managing from Director
as
April Managing 1992, Chairman Director and from as
and June 2000 May Chairman from Non-Executive as
February 2002 2003. to
(•)(2• (3)
Terry director Group Robin April Non-executive of January, since Evraz Nil SA 2008
son
Kingdom Bucks, United directors, 2005; Highland Gold Non-executive PLC
Director July 2008; director of Nikanor since Non-executive
July January from managing director 2008; 2006 of to
September Records Management Interactive Ltd. from
January 2004 2007.
(2)
(5) Managing April Rafael Capital Berber Group January, RP from 2004 47,795,722 2008 partner, to
Kingdom London, United Director Group and various of RP entities. present
Director Lynch April Various roles Merrill with 2004. to
(•)(21 (3) (4) (6) Stephen director Oke Non-executive BSG fi-om January, of Ltd. Resources 2008 Nil
Kingdom Surrey, United 2007; non-executive director from June Nikanor June of
Director January 2008; 2007 director non-executive of to
International 2005; from Ferrometals November non-
September director executive of Kazakh Gold Ltd. from
2007; October 2005 head of Corp. International to
Finance, Standard July Bank from 2001 2005. to
34-
legislation, period
exemption of consecutive than securities for 30 under
to more any a access
days; or
bankd'upt, proposal
ceasing capacity, that became made (iii) of that in within
to
act
year person a a
subject bankruptcy insolvency legislation relating instituted under
to to
any any or was or or
receiver, compromise proceedings, creditors had receiver
with
arrangement manager or or a or
appointed hold its assets; trustee to or
bankrupt, proposal under made has, AIF, before become date of this (b) the within 10 the
any years a
subject proceedings, bankruptcy insolvency, relating legislation instituted become
to to any
or or or
appointed hold had compromise creditors, receiver, with
receiver
to arrangement trustee manager or or
a or
shareholder; director, the officer of the assets or
described other than below: as
Appeals liquidation against, the issued trade and order 16, 2004 On December Court of of Douai
a
cease
Metaleurop 2005, others, 24, which Mistakidis director. November the SA of On Mr
anaongst
was
a
adopted plan presented by Metaleurop of continuation the court-ordered SA and Commercial Court Paris the
trading February Metaleurop reorganization 3, ended and resumed under the 2006. SA
operates now on name
Recyclex SA; and
companies restructuring and has been involved chartered Mr. Robinson is of since in corporate accountant,
a
appointed companies work, January of this he director number time of 1992. fi'om time of As
part to
was a
liquidated by creditors otherwise. Robinson director which Union then of Mr
courts,
was a were or
compulsorily plc subsidiary, (UK) plc Limited. International International and W.D.L. Union
was a
liquidated liquidation voluntary (UK) January t, and W.D.L. Limited entered creditors' 3 into 1996
on a on
July Group plc number 6, Albert director subsidiaries 2002. Robinson of Fisher and of its until Mr
was
a a
April (WW) Saphir resignation 23, 18, 2002, his 2002. Ltd. and Ltd ordered On June AFG Hunter
were on
liquidation receivership. voluntary Fisher entered August into 14, Limited creditors' Foods into 2002.
a on
plc Group plc receivership 22, Fisher itself entered SP! August and Albert into administrative 2002. on
proposed Corporation below, than has: director Other described of the
as no
subject penalties imposed by relating legislation by (i) sanctions securities been
court
to to
any or a a or
authority regulatory regulatory settlement entered with has securities securities into
agreement a or a
authority; or
subject penalties likely (ii) body, imposed by regulatory sanctions would other that be been
to court
any or a or
deciding securityholder
important proposed considered whether reasonable director. in for
to to vote a a
Stoyell currently Mining (formerly Scharring Ltd.) directors Mining the board of of Ltd. is member of Sentula Mr.
a
joined Shortly Stoyell ("Sentula"). board, after, Sentula the the Services South African Financial Board Mr.
Johannesburg Exchange began investigating allegations ("JSE") ("FSB") trading by insider and the Stock of
some
of the former and trading directors insider that of of the Sentula. The fined Sentula of FSB for events current
one
Stoyell place joining prior board. had the taken Mr. to
September requested suspend trading board 2008, 11, of directors Sentula that the the shares On of its the JSE of
following irregularities, alleged detection material have the the chief executive of financial occurred while former to
officer former chief financial of the the and the
officer executive officers for financial ended
company year were
suspension requested 31, The audited financial March 2008. Sentula could release its annual
not statements
was as
requisite by fully investigated period irregularities allowed within the the JSE the financial had been and until
suspension published irregularities lifted audited and the accounted for. The the
accounts
was once
were were
Trading brought JSE, the of the cautionary shareholders. attention the and the FSB under to announcement
a
subsequently 17, reconmaenced 5, lifted December 2008 and March 2009.
on on was
-35
directly
hereot; beneficially directors and executive Katanga, the the date officers of As
at
group,
own, as a or
indirectly, 67,049,722 direction exercise control approximately Shares of the 32.5% Common issued
or or over or
outstanding Shares. and Common
Conflicts of Interest
Corporation's knowledge, the below, disclosed best and other herein the of there known than and To
are no as
potential existing Corporation conflicts of interest between the and directors officers the
executive of
any
or or
Corporation subsidiaries, its and that: except
(a) directors, the directors and of officers, officers certain members and of of
promoters management
serve as
public possible companies other therefore that conflict duties and it is their arise between
may
a as a
Coq•oration director, officer, the director officers of and their duties member of
promoter or as a or
companies. of such other management
George (b) significant
shareholder Katanga. of director Mr. Forrest is the KOL and of Pursuant Kamoto
to
a a
Operating Operating provides planning Limited Agreement, KOL and conduct of services KCC in the to
exploration, development, operations mining, processing Property. and related with the Kamoto respect to
Analysis ("MD&A") Management's made Reference is and Discussion 31, the ended December for to
year
description relationship Corporation. further the 2008 for between and Corporation of the KOL The is
a
currently negotiating ownership the shareholders acquire with of 100% of KOL KOL. to
George (c) Enterprise the director Mr. Forrest is and director and G6n6rale Mr. Malta Forrest is of
owner a
a
("EGMF") (each Malta Forrest SPRL also shareholders and Corporation) of whom directors of the
are
obligations Operating contractual which has
Limited, relating with behalf Kamoto KCC, of mine
to
on
development, mining During the Property. construction and 31, December Kamoto the ended 2008 at
year
$29,417,000 paid goods total of
for EGMF annual services. made and Reference
financial is the to
to a was
Corporation of the description the 31, December for for ended
further 2008 of services statements
year
a
provided by EGMF.
(d)
Limited, affiliated with major Corporation,
represented shareholder the Cosaf A of which
is
company
a on
by Berber, Board Mining has interest ("DEM"). the Corporation in Mr. DEM SPRL The has
an an
drill, with
DEM and from Til•vezembe mine the the mine agreement crusher the transport KZC to to at
ore
plant. US$37,875,000. totalled Purchases from in 2008 DEM
Stephen
(e) Oke, nominated Oakey Holdings director by Board the Inc., also director of Invest is
BSG to
a
a
Oakey Holdings Corporation Resources, affiliate recently The of understands Inc. Invest that until BSG an
affiliates interest Resources and its had in continues have DEM and interest Bateman in
to
an an
Engineering
Corporation drill, The has NV. mine and with DEM the from
agreement transport to an
ore
plant. mine the Tilwezembe crusher the US$37,875,000. Purchases KZC totaled from in 2008 DEM at to
Purchases Engineering US$26,129,000. from Bateman NV in amounted 2008 to
(0 Corporation,
directors of the appointee One of the Mistakidis, is the Aristotelis of, representative of
one
directors, Hugh Stoyell appointed by, the
Relationship Chairman Glencore Finance the pursuant to
was
Agreements defined) (as hereinafter and Corporation, Raphael directors of the of the Berber, the is
one
appointee Limited, of which of Cosaf Facility. each lenders affiliates lenders of under the
See New
are
or
Development Developments Katanga "General of the Business of Recent Amendment and Restatement
Facility" Management of Former and of Loan "Interest Material and Insiders in Transactions".
Corporation
(g) Glencore,
understands The Limited that and Ruwenzori entered Limited Cosaf into
a co-
(the operation voting Agreement") "Co-operation and Corporation, relation in the which is agreement
to
intended, things, parties other rights respective that the their shareholders amongst exercise
in to
ensure as
Corporation Corporation the co-ordinated The in public understands filings from
that the Co-
manner. a
Operation Agreement February terminated effective 9, 2009. was
-36-
Corporation Officer, (h) Chief Executive the dated seconded the Isaacs is Interim
Steven agreement
to per
as as
period 2, secondment October Corporation. 2, October between and the The commenced Glencore 2008
on
by 31, terminated either with 2008 shall until March until accordance and 2009 in the continue party
or
$62,500 Corporation monthly plus Glencore the fee value of of added The
agreement. tax, to terms pays a
provision detailed the which
for services the of in is entitled claim Isaacs Mr
agreement. to
expenses as are
policy provision incurred direct the and accordance of the in result of the of services with the
as a
Corporation.
Corporation governing accountability The directors officers of the of the of laws of directors and existence
are aware
by opportunity requiring officers disclosures conflicts the and executive for and directors of and of interest corporate
rely Corporation will such laws directors' and officers' conflicts of in of
of in interest respect respect upon any
or
duty by directors breaches of of its officers.
any any or
related-parties being
competitive of with with those The the entered basis of into the of
agreements
terms
are
on
analysis competitive capacity, parties. charges fees, other The technical third includes review of the and the
capacity, performance by potential providers. experience also timeliness financial level and of service See "Interest
Management Insiders Material Transactions" below. of and in
PROCEEDINGS REGULATORY PROCEEDINGS LEGAL AND
legal pending
proceedings legal proceedings likely Corporation which material the be There is is
to to are no or or a
party.
MANAGEMENT INSIDERS MATERIAL INTEREST OF AND TRANSACTIONS IN
insider, director, interest, officer affiliate such had direct executive associate No of material
persons any any
or or or
indirect, recently completed transaction, interest, three financial has had material within the in
most
any years any or
indirect, during proposed the direct in which has transaction financial in transaction
current
any any
year or or
materially
materially Corporation, herein, Corporation's affected the will affect other than disclosed in the
as or
the financial audited 31, related ended December and MD&A for and the 2008 statements management
year
(the Circular") general Corporation intbrmation circular meeting "2009 the annual for shareholders of the of
currently scheduled be May Toronto, 6, held in Ontario 2009: to on
(a) by Corporation, relationship EGMF, director
the has relation controlled of contractual
in
to company
a a a
development, mining Property. mine and and Officers construction the Kamoto "Directors See at
Corporation Conflicts of Reference also made annual financial Interest" above. is the the of to statements
provided description the 31, December by for ended for
services 2008 of the EGMF. year a
(b) Corporation Glencore The and Agreement Off-take under Finance entered into the which Glencore Finance
buy production Corporation's will 100% of the annual and cobalt market terms. at copper
approval (c) by of the Merger major the the the of of shareholders and the certain of As part of Nikanor terms
(collectively, Corporation agreed Shareholders"), "Major Corporation the it bet•veen the of and each
was
Major relationship ("Relationship Agreements") the Shareholders the the of pursuant agreements terms to
Major appointment rights the Shareholders will that and nomination directors have certain of in of respect
Corporation. the
right particular,
appoint George directors; the Forrest has In Glencore Finance non-executive to two
one
director; Pitchley together) Properties non-executive (taken Cosaf and the Limited Limited
one non-
Oakey Holdings
and executive director non-executive director. Invest Inc. one
ceased be Arthur Chief the President Corporation Since H. Ditto has and Officer Executive of the to
right (but 2008, 1, effective October Glencore has the nominate remove) Finance the Chief Executive to
not
Hugh Officer, Stoyell right
George the and in Chairman, be that shall the the have Forrest to event
to
ceases
(but remove)
subject nominate Chairman. by the nominations Such confirmation the Nomination not to are
-37
right Corporation. George given board will also be the the the Committee of of directors of Forrest to
the appoint Executive Chairman of DCP and KCC. Non
rights Major appoint subject director(s) Shareholders the above nominate The of and/or is set out to to
as
holding Corporation, being them and the associates the 5% their certain minimum interests in in of
case
Capital (i) George of of and and of the and in each Fon'est Glencore Finance each RP Entities 10% respect
(taken together) Properties (ii) Oakey Holdings Pitchley Limited and Invest Inc.
Relationship
Shareholders, Major Agreements Corporation and These entered the into between the to were
take effect the Effective Date. on
change
particularly (d) the of his control disclosed the 2009 Pursuant of in
agreement to terms more
as
Ditto, Chairnaan, President, Circular, Arthur former Chief Officer director the Mr. Executive and of
Corporation, change US$4,490,417 received control result his of the of of in 167
payment amount
a as a
resignation October in 2008.
change particularly (e) the his disclosed Pursuant of of control in the 2009
to
terms agreement
more
as
Stephen
paid, change Circular, earned, has but has been control and Jones of Mr. yet payment not
a
repatriation US$2,268,167 resignation allowance the of result his in of December in 2008.
amount as a
change particularly her control the of disclosed the of in Pursuant 2009
agreement to terms
more
as
paid, earned, repatriation Circular, Dhir change but has been Ms. has of control and Anu yet payment not
a
US$1,366,959 US$100,000 Corporation. allowance the negotiations result of of in with the of
amount as a
paid has been this date. to amount
change
(g) particularly the his control Pursuant of disclosed the 2009 of in
agreement to terms
as more
Schoening, Corporation,
paid, Circular, earned, officer the has but Mr. Allan former has been of
yet not
a
a
change repatriation and of US$1,986,927 allowance the control in result his of of payment
amount
as a
resignation US$100,000 paid December in this has 2008. of been date. amount to
change (h) particularly the control Pursuant of his disclosed the of in 2009
agreement terms to
as more
Richards, Circular,
former Corporation, Mr. earned, the been paid, Brett officer of but has has
yet not
a
a
change
and repatriation allowance control of US$1,368,984 his in the of result of payment
amount
a as
resignation February 2009. in
also Officers Conflicts "Directors above and of Interest" See and "Additional Information" below.
AUDITORS, REGISTRAR AND TRANSFER AGENT
PricewaterhouseCoopers LLP, Royal King Chartered located Tower, Accountants West, Suite 77 Street Trust at
Toronto, 3000, Corporation. Ontario the auditors of the are
registrar and ("Equity") of the Common Equity Company The transfer & Shares is located Transfer Trust agent at
University Avenue, 400, Toronto, Suite 200 Ontario.
MATERIAL CONTRACTS
only by Corporation,
ordinary the other The business, entered into than the within the financial in of contracts
course
ended effect, that 31, 2008 December
still before such time follows: in
year or are are as
(a) Development Agreement. The "General Joint Venture Kamoto the Business See of Katanga of Kamoto
Joint Venture".
(b) Development Agreement. The DCP "General Joint of the Katanga See Venture Business Joint of DCP Venture".
-38-
Agreement. Development (c) "General Business Katanga of the The Concession Release See of Concession
Agreement". Agreement" "Combined and KCC/DCP Release Joint Venture
Relationship Corporation (d) Agreements Major between and each Shareholders. See the of the "Interest The
Management Material of and Insiders in Transactions".
Glencore between Arrangements Off-take and Glencore Nikanor International which (e) AG The pursuant to
buy delivery quantity Glencore take basis of of cobalt will and take 100% of the and
pay
copper
on a or
produced annually pit (subject existing contracts) KOV, Tilwezembe Kananga from the and mines
to
open
(subject acquired developed by and/or Corporation existing mines the and in
respect contracts to
any
new
acquired mine). newly Glencore Arrangements The the former Nikanor of Off-take in of respect assets
a
by Management been ratified also of have DCP. Insiders See "Interest and in Material yet not
Transactions".
Development Developments (f) Off-take Katanga Agreements. "General of the Business The See of 2007
Agreements". Glencore Finance Off-take The
Development (g) Agreement. Katanga of the The Amendment and Business of Restatement See "General
Developments Facility". and of Recent Amendment Restatement Loan Former
Exchange (h) Developments Development Katanga The "General Agreement. See of the Business of Recent
Facility". Amendment of and Former Restatement Loan
(i)
(the 20, 2006, Indenture. November Katanga The Trust entered indenture On into "Trust trust
a
Indenture") Company Equity principal the with & Transfer Trust for the of issuance Notes in aggregate
an
bearing CDN$115,000,000, payable semi-annually of in interest
14%
to at amount
per up annum
arrears
maturing
and payable 30, November 20, from November 2013. Interest 30, 2006 June 2007 the
to
on on
paid capitalized following July 30, record 2007 and of 19, The June Note holders Notes 2007.
to
was on on
qualified by the the entirety Indenture and is of material of Trust
the is its in reference terms to
summary
a
provisions profile Indenture, the Katanga's of
filed Trust of which under
is SEDAR
at copy a on
sedar.com. www.
Rank
obligations
ranking: (a) direct subordinated Katanga unsecured debt junior The Notes of senior
to
are
indebtedness; prescribed equally (b) and, with other by and law, each with all other the except extent to
and Katanga. unsubordinated unsecured indebtedness of future and present
Redem.ption
anniversary closing whole Katanga Notes, after the redeem the in of the in time third
part, at
may
any or
following (the "Closing 20, November of Date"), principal date 2006 the the for cash of percentage
at
(including capitalized interest) plus unpaid the of and Notes accrued and interest: amount
Applicable Time Percentage Period
Closing anniversary 3rd the 20, of the November 2006 After Date of
Closing anniversary until before the 4th the of Date
102%
on or
anniversary Closing anniversary After the 4th before of the Date until 5th the of the
on or
Closing Date 101%
And thereafter 100%
39
Closing whole following but in in within first the Date the Katanga three redeem the Notes
not
years may
(including price equal principal the redemption
102% of the of Notes tbr cash part, amount to
at
a
Indenture) Change capitalized in the interest) (as of Control defined
if Trust occurs. a
Change of Control
so) Notes; (b) (if and Change entitled (a) does elect the Katanga redeem Control do of
If not to to
occurs;
a
Change Katanga's rating Control, rating, debt acquiror's of is than less debt either before after the (c) the
or
by exist, recognized ratings ratings rating agencies such if
debt from
determined based (as
or, an
no on
required, Board), by Katanga will be of Katanga retained independent the the bank investment request at
a
specified
the price equal purchase the holder's for cash Notes, holder all of Notes of
part
at to to
a or
capitalized plus (including interest) principal accrued the of the above of Notes percentage set out amount
unpaid and interest.
Indenture) Change shall, of Katanga defined the (as Control Project the
of in Trust
request If
at
occurs, a
a
specified
price equal purchase cash portion the holder's for Notes, all of the Notes
holder the of
at to
a or a
(including principal capitalized plus interest) directly of the above the of Notes out amount percentage set
unpaid accrued and interest.
Covenants
long
comply Indenture, forth agreed with Katanga in the Trust Notes has certain
covenants, to set
as so as
Katanga--2006 Developments" outstanding. Development "General the of above. See also of Business are
20,
Katanga 2006, November issued •) the Warrants The Indenture. On Warrant warrant pursuant
to
a
Equity Katanga and Transfer (the Indenture") entered between & Trust indenture "Warrant into
following The (the Agent") 20, dated November thereunder "Warrant Company, 2006. agent warrant
as
qualified entirety by Indenture and reference material of the is in its of the Warrant
is to terms
summary
a
profile Katanga's
Indenture, provisions filed SEDAR
the of which is under
of Warrant the at copy on
a
www.sedar.com.
purchase price CDN$8.50 Share of Katanga Each the holder thereof time
entitles
Warrant at to
any
one a
following Closing Date, day time) that prior after which time (Toronto the is five
the 5:00 to p.m. years on
expire wilt and null void. and become the Warrants
provides adjustment the Katanga number of Shares issuable Indenture in the exercise The Warrant for upon
price the share the of
the and/or certain
of exercise
events, Warrants set
per upon occurrence
common as
Katanga--2006 Development "General the of forth Indenture. also See of Business in the Warrant
Developments" above.
INTERESTS OF EXPERTS
Wielligh, Waldeck, Salter, Simposya, Wally Takolia, Ebrahim Henrietta Alan Roger Dixon, Victor Anton
yon
under Report authors Combined Technical referred here Naismith, Cilliers and Rob McNeill the of the Petrus to
are
heading Projects". Roger Dixon, Wally Neither Takolia, Waldeck, Simposya, the "Mineral Ebrahim Henrietta Victor
has securities other
interest in Wielligh, Naismith, Salter, Rob McNeill
Alan Cilliers Petrus
Anton
any any
or
nor yon
Corporation acquire they affiliates, such the do interests.
of its associates receive
expect property to any or or or nor
by Corporation indirect, the subsidiaries held interest, beneficial direct securities
of its The in
property
any
or or
or
PricewaterhouseCoopers professional including herein, limitation, LLP, Accountants, without Chartered person any
Corporation, LLP, Combined Teclmical Brock Blackwell counsel Report authors of the and Cassels & the the to
outstanding the issued than of and Common Shares. less percent represents one
40
DISCLOSURE AUDIT COMMITTEE AND RELATED
Overview
principally responsible Corporation's directors Committee board of The Audit of the is for:
Corporation's recommending by nominated directors be for election the board the external auditor the of to to
meeting negotiating compensation Corporation's shareholders auditor; each annual and the of such external at
overseeing auditor; external work the the of
Analysis reviewing Corporation's Management the annual and interim financial Discussion & statements,
regarding they by (MD&A) approved board earnings
releases and and before revie•ved the of directors
press
are
publicly by Corporation; the and and disseminated
place
adequate reviewing Corporation's procedures procedures the reporting the financial for in
to
ensure are
public Corporation's financial other disclosure financial information extracted derived its of from statements,
or
previous paragraph. disclosure described than the in
Charter Audit Committee The
adopted Corporation's board which the of directors has Charter the Audit Committee The for out sets
a
responsibilities. complete mandate, Charter organization, attached Schedule Committee's The is "A" and
powers as
this AIF. to
hereof, Wardell, members audit of date The the Oke and Robinson the the committee. Mr. Mr. of As Mr.
serve as
literacy follo•ving concerning independence financial table the the audit information and of committee sets out
members.
(2) (•) Independent Financially Member of Literate Name
(3) Wardell Robert Yes Yes
Ten'y Robinson Yes Yes
Stephen Oke Yes Yes
Notes:
independent, considered be member have direct indirect To be of the Committee
to must not (1)
any
a or
relationship" relationship relationship could, Corporation. the "material which the with material is in A
a
Corporation, reasonably board with member's view directors interfere the of of the the exercise of of
a
judgement. independent
financially ability literate,
considered member have To be of the Committee the read and must to (2)
a
complexity accounting financial breadth level understand of and of of that issues
set present statements
a a
generally reasonably
complexity comparable expected that that the breadth and the issues of be
to to
are can
by Corporation's be the financial raised statements.
Audit Chairman the of Committee. (3)
Experience Education and
of Institute Chartered of Ontario. he Robert Wardell is member 2006 the of Accountants 1986 From
to was an a
Touche Deloitte former the Institute Chartered audit with & is member of Canadian of He LLP. partner
a
Emerging addition, Committee. Wardell served various Issues has witness Mr. Accountants In
expert
as an on
accounting reporting financial related and matters.
Terry Chartered restrncmring companies and has involved since is been in of Robinson Accountant corporate a 1982.
-41
Stephen University obtained from the of Witwatersrand Oke Graduate School of has held MBA Business. He
an
positions operational mining industry, positions within the various and metals and the senior in management
banking industry Court, for Smith investment and and Standard New NM Rothschild Sons Bank.
Pre-Approval Policies and Procedures
adopted specific policies procedures has The Audit and Committee the for services of non-audit engagement
as
Responsibilities Completion by section described in III.B "Powers and Auditor Work" Performance & the of its of
Charter, Audit attached hereto Committee Schedule "A". as
Category) (By External Service Fees Auditor
fbllowing Corporation by table The during discloses the fees billed the auditor the its external financial last to two
years.
Audit Other All
•) o) o) Financial Ended Audit Fees Year Related Fees Tax Fees Fees
$346,156 31, December $311,249 2008 $166,924 $Nil
31, $385,617 December $304,907 2007 $154,904 $Nil
Notes:
tees billed for fbe audit services. aggregate
(2) fees
billed for No reasonably related services that and performance
related
of the review of the
the audit to assurance were are or
Corporation's
financial and disclosed in 'Audit the Fees' column. statements not
are
(3) professional billed No lees services for than those listed other three in the other columns. were
INFORMATION ADDITIONAL
relating Additional
Corporation information the be found www.sedar.com.
SEDAR Additional to
at
can
on
intbrmation, including directors' and officers' executive indebtedness, principal remuneration and holders the of
Corporation's securities securities authorized and plans issuance equity for compensation under contained is in the
Corporation information circular of the
dated 20, March management which 2008 available is SEDAR at
on
www.sedar.com available be
and will in the Circular 2009 SEDAR www.sedar.com finalized and
mailed
at
on once
Corporation April shareholders the of in Additional 2009. provided financial information Corporation's is the in to
audited consolidated and financial analysis management's discussion and financial for the ended statements year
31, December 2008.
-42
GLOSSARY OF TERMS
number, singular
the importing the •bllowing glossary Words where used in this of certain AIF. The is terms
a
genders. importing gender plural include all
requires, and words include the and vice context any versa
given Transactions"; Insiders Material meaning and Management in the it of has Circular" in "Interest "2009 to
Contracts"; Territory" meaning given "Adjacent has the it "Material in to
Development "General Agreement" meaning given of the the it in Business has "Amendment Restatement and to
Facility"; Developments Amendment and of Katanga Restatement Loan Former of 2008
Development meaning Katanga Agreement" "General given of the of has it in Business "Amended JV the to
Agreement"; Developments Combined KCC/DCP Venture Joint Recent
Limited; "BSG BSG Resources" Resources means
Katanga; the board directors of of Directors" "Board of "Board"
or means
Development Katanga Developments "General meaning given "CAMEC" has it in of the Business 2007 of the to
Bid"; Take-over CAMEC
Contracts"; meaning given "Closing the "Material Date" has it in to
"independent Report" dated 2009 titled Technical 17, technical Technical the March "Combined report
means
Republic Congo", Limited, Katanga Mining Katanga Province, the Material Report Democratic of Assets of
on
Corporation's www.sedar.com; profile which under the is available SEDAR at on
Mining Review"; given Description meaning "Property has Location "Commission" the it in and DRC to
given "Corporate meaning Katanga Mining has Name, Shares" "Common the in Structure of Limited it to
Incorporation"; Address and
Agreement" given Development meaning has the "General the "Concession Release it in of Business of to
Developments Review"; Mining Agreement Katanga Concession Release and 2008 DRC
Agreement" meaning given Development Katanga "General the the Business 2007 "Conversion has it in of of
to
Developments Financing"; The Glencore Finance
given Development has meaning Price" the "General Katanga the 2007 "Conversion it in of Business of to
Developments Financing"; Glencore The Finance
Agreement" meaning given "Co-operation Interest"; "Directors Conflicts of has the it in and Officers to
"Katanga" Katanga corporation incorporated "Corporation" Mining Limited, the laws of
pursuant to
means or a
expressly subsidiaries,
requires otherwise; otherwise Bermuda and the unless stated its context or
meaning Development Katanga given "DCP" the has in Venture"; Joint it "General of the Business of DCP to
Description Description meaning given Exploitation "Property "DCP has the of Permits" it in and Location to
Rights"; mineral DCP tenure
meaning the Development Katanga given has "General the "DCP Joint Assets" in of it Business of Venture to
Venture"; Joint DCP
43
Interest"; and Conflicts meaning given has "Directors in Officers of the "DEM" it to
Development Venture"; Katanga meaning given Joint of it "General of the Business Kamoto "DRC" has the in to
joint subject the of DCP Venture Agreement; Venture" "DCP which is the Joint Joint venture matter means
Agreement" joint September 9, dated between and "DCP the 2004 GEC Joint Venture agreement venture means
Gdcamines;
2008, all Merger 11, Date" the date which became unconditional January "Effective the in
respects; on means
given meaning Interest"; "EGMF" has and Officers Conflicts of the it in "Directors to
meaning Description Permits"; given "EIS" the and "Property it in Location has to
Developments meaning Development Katanga given the it "General the Business of "EP" has in of Recent to
Agreement"; Combined KCC/DCP Joint Venture
meaning given "Equity" Registrar Agent"; "Auditors, and has the it Transfer in to
"Description given meaning Katanga has the the of Environmental "ESIA" of Policies it in Business Social to
or
Protection"; and Environmental
given "Description meaning Katanga the "ESMP" has of Policies the it in Business of Social Environmental to
or
Protection"; and Environmental
Agreement" Development "Exchange meaning given the "General Katanga has in of the Business 2008 it of to
Developments Facility"; and Amendment Restatement of Loan Former
meaning Development "Exchange Option" has given Katanga the it "General of the in Business of 2007 to
Financing"; Developments Glencore The Finance
Development meaning given "Exchange has the Katanga Price" "General Business 2008 the it in of of to
Facility"; Developments Amendment and Restatement of Former Loan
Underwriting Agreement" given Development "Facility the meaning it "General the Business has in of of to
Developments Facility"; Katanga of 2008 Amendment and Former Loan Restatement
"Feasibility Feasibility Study" "The Copper Company Study May 16, dated 2006 2006" Kamoto
means
by prepared by Creek and Hatch with commissioned LLC, International in association McIntosh RSV Caracle KFL
Consulting Engineers feasibility study updates April and 3, and Scientists which revises and SRK 2006; the dated
meaning Agreement" Development given Katanga has the of "General of the "Former Loan it in Business to
Developments Financing"; Glencore The 2007 Finance
Development given Facility" meaning "General the it of Katanga "Former Loan has in the Business of 2007 to
Developments Financing"; Glencore The Finance
meaning Bankruptcies, "FSB" has given Orders, "Directors and Trade the it Officers Cease in Penalties to
or
Sanctions;"
principles; generally accepted accounting "GAAP" means
Development given meaning Katanga the "GEC" has of it in "General the Venture"; Business of DCP Joint to
44
incorporated Gdn6rale Mines, the "G6camines" des des owned laws Carri6res under
of La
et state company means a
DRC; the
AG; "Glencore" Glencore International means
(Bermuda) Ltd.; Glencore Finance "Glencore Finance" means
Arrangement" meaning given Dependence Key has the Potential "Glencore Off-take "Risk it in Factors to on
Arrangements"; and Contracts Business
Ltd.; Hatch "Hatch" means
Corporation International private Bank; which World "IFC" the Finance is the of the
sector means arm
meaning given Bankruptcies, has the Orders, Penalties "Directors Officers Cease "JSE" it in and Trade to
or
Sanctions;"
joint the Joint Agreement Venture" formed the Joint "Kamoto Kamoto Venture pursuant venture to
means
Gdcamines; between and KFL
joint
February Agreement" 6, the between and "Kamoto Venture dated Joint 2004 KFL agreement
venture
means
presidential publicly G6camines, by which 4, 2005; decree ratified August
was on
Development meaning given "General Venture the Katanga "Kamoto Joint Assets" has it in of the Business of to
Venture"; Kamoto Joint
Agreement" meaning given "Property Description has the Lease Description it "Kamoto and Location of in to
rights"; mineral KCC tenure
Operating Operating Agreement" meaning given Development has "Kamoto the Limited "General it in of the to
Operating Katanga Operating Agreement"; Limited Business of Kamoto
Property" exploration mining and properties the which form the "Kamoto of Kamoto Joint Venture part
means
Assets;
"Katanga" Katanga Mining Limited, incorporated corporation Bermuda; the laws of
under means a
Development "KCC" the meaning given has it in Katanga "General Venture"; of the Business of Joint Kamoto to
Limited.,
corporation incorporated Virgin "KFL" KFL Islands; British the laws of the
pursuant to means a
given Development "KOL" has meaning the Operating "General Katanga it in of the Business of Kamoto to
Operating Agreement"; Limited
plant processing Concentrator" the and "Kolwezi for the cobalt of concentration and
treatment
means copper
ore
Group long-term granted by which the holds G6camines; lease
a over
pit province mine "KOV" the DRC, consisting Kolwezi situated
Katanga in the
the Kamoto of of
open
means
near
Oliveira, Virgule bodies; East, and FNSR ore
pit" Virgule; East, Kamoto Oliviera and "KOV means
Concentrator; Kolwezi "KZC" the means
meaning given has the "Leased Assets" Contracts"; it in "Material to
45
exchange London Metal "LME" means
by LME; cathode that is certified "Grade the
"LME Grade A" A"
copper means as
Development meaning the 2007 given Katanga Metals" has the it "General "LN of Business of in to
Developments Metals"; LN
Development ofKatanga Developments meaning given "General the the Business in of has it 2007 "Luilu" to
Profile"; Production
meaning "Major Insiders the and given Management Shareholders" has it of in Material in "Interest to
Transactions";
meaning given Interest"; and has Conflicts Officers "MD&A" the it in of "Directors to
Development "Merged meaning the given Katanga has "General JV" the it in of Business of Recent to
Developments Agreement"; Combined KCC/DCP Joint Venture
acquisition by "Merger" Katanga herein; the described of Nikanor
means as
LLC; "McIntosh McIntosh RSV RSV" means
adopted "Mining adopted July 11, Code"means 007/2002 and the 038/2003 March Law 2002 Decree No. No.
on on
supplement Mining 26, Code; 2003 the
to as a
Development meaning given ofKatanga "Necessary the the Surfaces" has it in "General of Recent Business to
Developments Agreement"; Combined KCC/DCP Joint Venture
facility approximately Coq•oration Facility" US$265.3 of described "New million under the loan the
means
Developments Developments--Amendment Katanga and of the "General Business of of Recent Restatement
Facility". Loan Former
plant Facility" processing Corporation Processing Luilu; the SX;/EW intends "New the
construct to at means new
incorporated PLC, "Nikanor" Nikanor
Man; under laws the Isle of the of
company a means
Development Developments"; meaning given Katanga "General of has the in "Notes" Business it of the 2006 to
"Oakey" Oakey Holdings Inc.; Invest means
Development Developments meaning given Katanga has the "Offer" "General the Business of it in of 2008 to
Merger"; The
given Agreements" meaning Development "Oil-take the "General Katanga Business has it in of the of 2007 to
Developments Agreements"; Glencore Off-take The
"Pitehley" Pitchley Limited; Properties means
Agreements" "Relationship meaning given Management has the Insiders Material it in in "Interest of and to
Transactions";
Explorer" meaning Katanga given Development "General of the Business has the •'RP 2008 it in of to
Developments Facility"; Amendment and of Restatement Former Loan
46
Reporting (the "SAMREC" The African Code Mineral South tbr of Mineral and 'SAMREC Resources Reserves
Code') standards,
Reporting 'the guidelines Code' minimum reconnnendations for and Public of out sets
or
exploration results, Africa; Mineral Mineral South Resources and Reserves in
Reporting the Code African and "SAMREC Code" South for of Mineral Reserves, Resources Mineral
means
prepared by (SAMREC) auspices the At?ican committee under the African South mineral Resource of the South
Mining Metallurgy, of 2000; Institute and March
Analysis System Retrieval; "SEDAR" the for Electronic Document and means
given Bankruptcies, meaning "Sentula" the and has Order, Penalities "Directors Officers Trade it in Cease to
or
Sanctions;"
Shares; "Shareholder" holder of Common
means a
Rights meaning given Development Plan" has the Katanga "General "Shareholder it in the Business of of to
Developments Bid"; Take-over CAMEC 2007
de Congo "SNCC" the Soci6t6 Chemins du Nationale de Fer means
meaning given Logistics "SNCC has the Risks"; Network" it in "Risk Rail Factors to
Consulting" Consulting (South Africa) (Pty) Ltd.; "SRK" "SRK SRK
means or
given Development meaning Katanga Developments "General "Trust" has the Business it in the of 2008 of to
Facility"; Amendment and of Former Restatement Loan
meaning given Contracts"; has the "Trust Indenture" it in "Material to
Exchange; Stock "TSX" the Toronto means
granted Option" option the the "Underwriters' CDN$152,250,000 the underwriters in with connection to
means
Corporation (by placement financing by private subscription May receipts) the million that of of
2, closed 21
way
on
subscription purchase 2006, entirety additional million receipts May exercised 7 which
2, its in
to to
up an was on
proceeds Katanga; CDN$50.75 2006 for of million aggregate to gross
Development meaning given Katanga Developments"; "Units" has the the in "General of Business of it 2006 to
Agent" meaning given Contracts"; has the it "Warrant in "Material to
meaning given the Contracts"; has "Material "Warrant Indenture" it in to
Development meaning given "Warrants" has the "General of Katanga it in the Business of 2006 to
Developments";
Group, World providing the organisations responsible "World Bank" Bank of five international
for
group means a
financing development advice and reduction, the countries for of and and economic for poverty to
purposes
safeguarding encouraging investment; international and
Geological/Exploration Ter•ns
Terminology and Conversion Unit
Canada, System System primary the Metric In generally length SI is the
of system is and nr
measure
expressed ldiometres, eentimetres, expressed in expressed and volume is metres
cubic
metres, as mass as
47
generally expressed precious grades
platinum- metric and nickel tonnes, and The and percent.
copper
are as
grades generally expressed metals
but billion in parts
also be parts
ton group may per are per per
ounce as or
quoted Conversions System Imperial System provided million. from SI
Metric the below the and to
or
are
geologic Many publications practical. where of the and files SI the
work
recent assessment
more use now
System. exclusively Imperial files but older work system Metals minerals almost refer the and assessment to
accepted industry
this conform in report online mineral the directed and reader is to to acronyms usage an
www.maden.hacettepe.edu.tr/dmmrt/index.html. at source
gram/tonne; Conversion factors utilized ounces/ton 0.029 this include: 34.29 in AIF 1 troy ounces/ton troy
gram/tonne; gram/ton; gram/ton; ounces/ton 31.1035 troy 1 1 troy 0.0322 0.032 ounces/ton 1 1
gram
kilograms;
pound 31.104 1 troy troy 1.609 0.454 1 toot 0.3048 1 1 metres; mile ounces; grams;
ounce
hectares; g/t kilometres;
and, gram/tonne 0.405 1
2.59 kilometres. The 1 mile is term
sq square
acre
or
expressed (part "gram ppb gram/tonne billion). million) tonne" where (part
1000 1 1 per ppm per per as
billion; abbreviations include ppb Other million;
parts parts opt
oz/t short per ppm per
per
ounce or
Moz (1000 kilograms); specific gravity; million SG ton; Mt million lb/t tonne; t tonne ounces;
pound/tonne; (2000 and, short pounds). ton st
sulphide (Cu5FeS4). important "Bornite" iron
An mineral copper copper ore
sedimentary clastic
rock, angular "Breccia" the constituent clasts which of
coarse are
"Carr6" 920 920 unit of measurement metres x
(Cu2S). sulphide important cobalt "Carrolite"
mineral An copper copper ore
sulphide (Cu2S). important "Chalcocite" mineral
An copper copper ore
sulphide "Chalcopyrite" (CuS2). major
of
A copper copper ore
article of broken "Clast" down rock
product "Concentrate" through which valuable (concentrated) in minerals have been enriched mineral
a
processing
fragment "FNSR" of is KOV a
"g/t" kilogram) (1000 tonne per grams
"Ga" thousand million
years a
"Grade" element the of material metal
unit content per or
naturally
typically occurring inorganic "Mineral"
crystalline substance with
structure a a
"Ore" economically mineral rock that worked be
can a or
"Outcrop" rock surface unit at exposure
profit that of "Reserve" expected reasonably Resource which be mined part under
at a can a
by conditions defined economic the JORC Code as
body sampling mineralised "Resource" there which geological is sufficient for information and
understanding
potential deposit outline economic merit of to a
"Sub-outcrop" the rock below surface unit exposure
-48
"Sulphide" sulphur element in which the
mineral
metallic combination is in with
a
one or more
elements
"Tailings" products resulting the
processing material from the of waste ore
Measurement
imperial equivalents into Conversion of metric units is follows: as
Multiply by Imperial Metric Units Units
hectares 2.471 acres
3.281 feet metres
kilometres (5,280 feet) 0.621 miles
(troy)
0.032 grams ounces
(short) 1.102 (2,000 lbs) tonnes tons
grams/tonne (troy)/ton 0.029 ounces
following
exchange The
table the
buying foreign based by the of currencies certified
rates,
out sets rates
noon on as
Canada, the Bank of (US) for the conversion of States dollars (CDN) United
into dollars Canadian in effect
at one
following period the
exchange the end of (based and the exchange the the last the
of
rate
average rate average on on
day period) high month of the exchange and the in such period. of and low for such rates range
US/CDN Year 31, 2008 Dece•nber ended
Period End of 0.8166
0.9381 Average for Period
1.0289 High Period
Period for Low 0.7711
SCHEDULE "A"
CHARTER FOR
AUDIT THE COMMITTEE OF
OF DIRECTORS THE BOARD OF
MINING KATANGA LIMITED
MANDATE I.
"Committee") (the (the "Board") Katanga Mining Audit Committee (the The the Board Limited of of of Directors
fulfilling "Co•npany") oversight responsibilities. primary the shall The assist Board in its financial Committee's duties and
responsibilities
independent objective under this mandate and monitor:
party to to are serve as an
Company's quality integrity The of the information; financial and 1. and other financial statements
compliance regulatory legal such information requirements; The of 2. and with and statements
qualifications independence (the Company's independent the The of external "Auditor"); and 3. auditor and
procedures performance Company's internal accounting of the The Auditor. 4. and
STRUCTURE OPERATIONS 11. AND
Con•osition A.
comprised The three Committee shall members. be of
or more
_Qualifications B.
member Each Committee be member the of the of Board. must a
majority employees the members of the Committee shall be Company of A officers of the affiliate the of of
not or an or
Company.
member Each read including Comrnittee able and of the be understand fundamental financial the must statements, to
Company's sheet, balance and flow income cash statement, statement.
Appointment and C. Removal
By-laws Company, accordance appointed by with In the the members the of the Committee shall the of be Board and shall
duly qualified until such elected and resignation member's
such member's until is
removal. earlier serve
successor
or or
by member Any removed, the Committee of
be without majority Board. with of the
vote may cause, or a
Chair D.
the Chair, designate shall select the
Unless Board majority members of by the Conmaittee shall Chair the of all
of vote
a a
agendas members the call, meetings Committee. The Chair shall of the and chair the the Committee. for all of set
Sub-Committees E.
delegate authority The consisting and Committee appropriate, subcommittees
form of members •vhen
to
may
one or more
authority including pre-approvals permitted the services, provided and non-audit that of audit decision of such grant to
a
pre-approval presented
shall subcommittee meeting. be Committee the full scheduled its grant to to at next a CFD-#7297524-v1
A2
Meetingfi F.
frequently The shall Coirwnittee
each fiscal least four times in circumstances dictate. The Auditor
meet at
year,
more or as
of, speak given each meeting concerning reasonable shall and the notice and be entitled attend be of Committee the at, to
Company's appropriate, meeting. and, the financial if Committee feels it is annual other
On statements at
necessary
every or
by Auditor, call meeting the Committee the Chair shall of the that the believes
consider request Auditor to matter any
a
brought should be Committee, shareholders the Company. the of the the attention the Board of to or
meeting, majority each
shall employees Company members consist of of that
officers the At of of
not
quorum a a are or or
affiliate Company. of the an
goal comnmnication, periodically separately of its the Committee fbster As with each part of to meet open may
the discuss that and Auditor believes of these the Conmaittee
would be management to matters
any
any groups or
appropriate addition, privately. the discuss annually Conmfittee should the In Auditor and with to meet management to
the Company's financial review in Section consistent with this Charter. III of
statements manner a
director, meetings The Company, Conmfittee invite the of its other and whom deems it to
any may manager any any person
appropriate responsibilities.
consult in order its Committee The also exclude meetings from its out to to
carry may any
appropriate responsibilities. deems it exclude order its in to to out person carry
II1. DUTIES
Introduction A.
following
The shall the
recurring functions be duties the Committee carrying of in outlined its in
out common purposes
guide this Charter. Section of understanding These duties should I with that the the
Committee fulfill
serve as a may
policies adopt additional duties procedures and additional changing appropriate light be and business,
in of
may as
legislative, regulatory
conditions. The other responsibilities shall also Committee other
duties and
out carry any or
delegated by it related the Board from time the the time of outlined Committee this Charter. Section of in I to to to purposes
discharging
Committee, oversight role, study empowered The investigate in its is interest
of
to
matter
any or concern or
appropriate study which the deems investigation its discretion Committee in by sole for the Committee. or
given Company's Conmfittee shall be The the full staff, accounting internal staff
and Auditor other to managers, access as
acting these duties. While the within of stated its have Committee shall all the the to out necessary carry
scope purpose,
authority of, subject but shall the Board. remain to,
Responsibilities and Powers B.
following responsibilities will have The and, the Committee discharge perform responsibilities, order in these and will be to
namely, the vested with below, authorities forth and Committee shall: the set powers
Independence of uditor A
and relationships discuss with the Revie•v disclosed Auditor objectivity impact services the that
and
any
may or
independence and, the Auditor of obtain if
formal setting written from the forth all Auditor statement
necessary,
a
relationships between Independence Company, Auditor the and the consistent with Standards Board Standard 1.
Take,
2. take, Board appropriate recommend the independence that the
action the Auditor. of to or oversee
Require directly Auditor the the Committee. report to to
hiring Company's and regarding the policies Review employees and former and partners,
partners approve
employees independent the of former Auditor and Company. external auditor of the
Performance by Completion of Auditor & Work its CFD-#7297524-v1
A3
responsible directly oversight by (including disagreements Auditor for the of the Be 5. work the resolution of
reporting) regarding between
preparing issuing and the financial the Auditor for of
management
purpose or an
related work. audit report or
annually performance appointment the 6. of Auditor and by the Review recommend the of the Board
new, or re- a
by Company's shareholders existing, election the Auditor. of the
auditing including all Pre-approve permitted and 7. thereof, services fees and be services, non-audit the
terms
to
performed Company by the for the Auditor non-audit services: unless such
(a) pre-approved, reasonably which
expected constitute, the than in
5% of aggregate, not
not to
are are more
paid by during Company total the of Auditor the fiscal the the the which in
amount to year revenues non-
provided; audit services are
recognized (b) by Company
the the the be and time of services; non-audit engagement not at to were
(c) brought promptly by Company approved
prior of the the attention Committee the the and to
to
are
completion by the audit the by of Committee members Cor•maittee of the who
or or one more are
authority approvals of the members delegated whom Board such has by been the Committee. grant to to
Operations of Company Financial the Internal Controls &
procedures Establish 8. for:
(a) receipt, the complaints by Company and of retention regarding the accounting, received internal treatment
accounting controls, auditing and matters; or
(b) confidential, the by
employees submission regarding Company of the of
anonymous concerns
auditing questionable
accounting matters. or
Preparation of Financial Statements
significant with reporting Auditor Discuss 9. judgments the and financial and made issues in connection management
preparation Company's including of the with the significant financial changes Company's the in statements,
any
application principles, accounting selection adequacy major of Cornpany's
issues the internal of the to
any or as
adopted light special controls and in material of deficiencies. control steps any
correspondence Discuss with 10. regulators and the Auditor governmental agencies with and management
any
any or
employee complaints published material regarding •vhich Company's raise issues financial the reports
or
accounting policies. statements or
Discuss with 11. regulatory the Auditor the and
and effect of accounting off-balance initiatives well management
as as
the Company's sheet financial structures statements. on
with 12. Company's major the Discuss financial and the risk has taken management steps management
to exposures
including monitor control and Company's such policies. the risk and risk management assessment exposures,
required Discuss the with 13. the Auditor discussed be relating particular: the audit, conduct of in matters to to any
adoption (a) of, changes The Company's significant auditing the principles accounting and to, and
or
suggested by practices Auditor, the auditor internal
management. as or
(b)
inquiry by provided The Company's letter Auditor the the and that letter. management to response
Any (c)
difficulties including the in work, the encountered of audit the
restrictions of
any course scope on
requested
activities information, disagreements significant and
with to management. any access or CFD-#7297524-vl
A4
by Company Public Disclosure the
Company's analysis quarterly (MD&A) and Review the annual and financial discussion 15. management statements,
publicly the Company and earnings information. releases before Board and discloses the this approves press
procedures adequate procedures Company's reporting satisfied financial and internal controls Review the 16. that be to
public place Company's tbr derived the disclosure financial extracted in the review of of intbrmation from
are or
periodically assessing described paragraph, financial other disclosure previous its and the than in the statements,
adequacy procedures. those of
by Company's disclosures made the the Review Officer and Chief Financial Officer Committee Chief Executive 17. to
during Company's their the significant deficiencies financial about certification of in the statements
process any
design operation of controls involving therein fraud internal material weaknesses and
management
any or or or
employees significant Company's who have role other the in internal controls. a
of Carlying Mandate Manner Out its'
Auditor, quality Company's accounting the the Consult with without about the of of 18. the management,
presence
principles, completeness controls Company's internal and the and of the financial statements. accuracy
employee Request Company meeting officer of the Company's 19.
outside counsel Auditor attend the
to any or or or a
of, the members consultants
Committee with of Committee. the
to to, meet any or or
quarterly. internal auditor and the 20. Meet with Auditor in least executive sessions management, separate at any
authority,
independent legal, appropriate, special accounting deems 21. Have the the retain it
to extent to necessary or
the advisors. consultants advise other Conmaittee to or
regular Make the 22. Board. reports to
adequacy annually changes proposed 23. Review and Charter and recommend the of this
the Board for to
any reassess
approval.
Annually performance. review 24. Committee's the own
Auditor, Provide Company's 25. communication the of
senior the financial and
management
among open an avenue
Board. and the
delegate responsibilities independent
authority these 26. other than Not members the Congnittee the of
to
one or more
ratify meeting, by the Committee provided which non-audit its the services be to must next at to pre-approve,
Auditor.
Audit Role Limitation of F. Committee's
the responsibilities Charter, plan Committee has the duty While and forth this the Committee in is the of it set not to powers
complete conduct
Company's that the audits determine and disclosures and financial
and
to statements
accurate
or or are are
generally principles accepted accounting applicable accordance with in regulations. and rules and These the are
responsibilities Auditor. the of and management CFD-#7297524-v1
SCHEDULE"B"
following Report incorporated by Combined is executive contained The the the Technical in summary
capitalized herein, this Schedule "B" reference the A1F which is in attached. Unless otherwise defined all to
meaning Report. ascribed following herein shall have used the thereto in the Combined Technical The terms
qualified
only entirety by is and is in its
contained the detailed Combined disclosure the in summary a more
Report available SEDAR Technical which is www.sedar.com. at on
Summary
Property Description and Location 1.1
Consulting Africa) (South (Proprietary) by SRK Mining Limited Katanga been commissioned Limited has
("KML")
compile independent ("ITR") complies Teclmical Report which the National •vith to
an
Companies Standards ("NI 43-101") tbllowing Disclosure for Mineral instrument 43-101: of the
on
projects operations (the Assets") and associated infrastructure located Kolwezi the "Material in
near
Katanga Province of the DRC:
Mining (the "Mining Complex"); Assets
operating pit T17, Mine"); ("T17
mine
open o an
Tilwezembe, recently ("Tilwezembe closed pit Mine");
mine
open a o
underground operating ("Kamoto Mine"); Kamoto, mine
o an
Kananga, pit dormant ("Kananga Mine");
mine
open o a
development project pit mine,
("KOV Mine"); KOV
open o a
development mine, project Mashamba ("Mashamba East Mine"); East
o a
Complex"); Processing (the "Processing Assets
Kamoto, operating ("Kamoto Concentrator");
concentrator an o
metallurgical Luilu, operating plant Metallurgical ("Luilu Plant");
an o
Refinery Refinery Additional ("WOL/SX/EW Project"); WOL/SX/EW and o
Infrastructure production the of the for saleable metals. necessary
Reference Terms 1.2 of
data has derived using used this Technical ("LoM") plan been in ITR revised Life-of-Mine the based the
on
Operating Engineering done ("2008 work in the Study") Study Limited 2008 compiled by Kamoto SRK
Engineering. and Bateman
impact
crisis, financial the result of As which the felt the of
2008, last in and the of
quarter
a
was
subsequent including commodity prices decline cobalt, changed in steep and its for KML
strategy
copper
development plants, the
and of the mines emphasis plan. which necessitated revised LoM The process
a
capital expenditure constrain the
ktpa processing capacity in initial and the limit 310 to
to
to was years
Copper ktpa previous Copper. from the plan, 400 completed based the Work revised which
LoM in
on was
period, month and completed level standard is the Study. with consistent the work in the to 2008 two not a
Study Engineering The subsequent 2008 and the Bateman prepared work has been exclusive for the benefit
exclusively of KOL and
3,4
subject for the Phase and project, and is 5 into entered separate to
agreement
a
between Engineering processing plant Bateman capacities KOL, The and capital the well and
as as
operating using estimates have been factored work Study. the capital the from operating 2008 The and cost
given 2009 work estimates in Engineering's based Bateman updated database internal
for and cost
were on
changes only. scope CFD-#7297524-vl
B2
Ownership 1.3
exploitation rights The Kamoto, Mashamba for together with the East and T17 Mines Kamoto
Concentrator, Metallurgical Luilu WOL/SX/EW joint Plant and Refinery Project
held in
venture
are a
(Kamoto Copper Company, exploitation rights KCC "KCC"). vehicle SARL The KOV, Tilwezembe for
Kananga
joint and held vehicle (DRC Copper mines in Project, and DCP SARL Cobalt
venture
are a
"DCP"). Katanga Mining ("KML") Limited interest remaining has DCP, 75% and with the both KCC in
a
entity by held 25% of each (La des G6n6rale Mines). Gecamines des Carri6res et
Geology Mineralization and
Geology
n•neralized The Katangan the end Copperbelt, metallogenic the
of
the of at great western zones
are one
provinces world, which of the contains the and of world's cobalt and richest
uranium
copper, some
deposits. mainly
deposits metasedimentary by These hosted proterozoic late Katangan rocks of the are
km thick sediments succession volcanics, 7 of volcanoclastics system, with minor intrusives. and
a
Geochronological
deposition data Katangan indicate of the of
sediments about of 880 million
age an years
deformation during
Katangan and the than million This less resulted deformation 650 in at
orogeny years.
the
trending NS-SE Arc, Lufilian
through which the extends from Africa Namibia of coast to west
on
lying Zambia, the the
south DRC, the of DRC. Within the than km extends for
300 from to zone more
Kolwezi the north-west in Lubumbashi the south-east. in to
Stratigraphically, deposits the rich cobalt
and Zambia found the localized in and DRC in the
copper
are
Supergroup ("Roan").
Roan The unconformably base Katanga Roan succession, of the the
at
occurs
overlying (mid-Proterozoic). the basement rock of Kibaran separated overlying the The Roan is from
age
Upper Kundelungu by rocks the of conglomerate, and
grand conglomerate. Lower The the
supergroups
a
Kundelungu composed Lower is conglomerate, of and shales basal sandstones Upper while with the
a
Kundelungu
essentially separated consists Kundelungu of by and sediments is the from Lower
a
conglomerate, (French) Conglomerat'. the 'Petit
large-scale Within the Lufilian trending Arc extending wavelengths E-W folds NW-SE for with to
are
along kilometres. The folds through faulted the the anticlines which of rocks of the Roan have
crests
are
diapirically injected
been planes into the fault squeezed fault and over-thrust lie above rocks of to
zones, up
Kundelungu.
the
lithologies The "fragments" over-thrust Roan
surface.
segments
younger
occur as or on
fi-agments The original intact geological that units the
fragment each. succession within A
preserve are
aligned plane. hundreds could be of of the fault metres across
Katangan Copperbelt, mining the In sub-outcropping outcropping cobalt
for these and in to copper
occurs
fragments.
Mineralization 1.4.2
Primary mineralization, sulphides, the in form the of within with and Lower is associated the Roan Strat D
the RSF OBI and the for syn-sedimentary thought and the SDB Typical origin. OBS and is SDS for be in
to
primary sulphide
bornite, chalcopyrite, minerals chalcocite and while occasional native copper are copper
cobalt is the in form of carrolite. mineralization The disseminations association with in
occurs
as or
hydrothermal alteration carbonate silicification. and
Supergene generally mineralization associated is the levels with sub-surface of oxidation the in sometimes
deeper
than
below secondary The 100 surface.
for minerals cobalt and most m common supergene copper
heterogenite. malachite and Malachite
the is mined the main mineral confines the within of current are
pit. Mine KOV CFD-#7297524-v1
-B3
stratigraphically lithological RSC, rocks, The and unit intermediate between the OBS OBI host contains
a
relatively appreciable mineralization. RSC
less The mineralization the contains contacts
copper copper
near
overlying underlying RSC, portion the and formations. The middle of the with SDB formation the RSF
by normally relatively Gecamines, considered be "sterile" mineralization and less is contains to
copper
sampled. potential mineral known of other sometimes The of the RSC is less well than that formations. not
hydroxide, heterogenite, The has RSC been be mineralized cobalt which observed well in to
supergene
infillings, especially
surface. the
vug occurs as near
being atypical by Mwashya The mineralization the hosted Tilwezembe Mine is Formation. The R4 at
or
infilling generally mineralization fissures associated with the of
brecciation. and fractures
open occurs as
typical (chalcopyrite, mainly minerals The mineralization consists of malachite and
copper
pseudomalachite), (heterogenite, spherocobaltite) cobalt carrolite and and minerals minerals
manganese
(psilomelane manganite). and
1.5 Status of the Material Assets
provide Tables and details the the 1.1 of 1.2 status assets• on
Table 1: Assets
April
3
2
operational Operating 3,40 KCC T17 Mine klTl Mine
op 2024
Operations ceased in
April
Tilwezembe 3
km 7,64 DCP due Dormant 2008 lower November
to op
Mine 2009
prices / cobalt
copper
April
11,04 3
Operating operational KCC Kamoto Mine Mine
ug 2 km 2024
April
Operations 11,04 ceased due 3 to
Kananga
Mine DCP Dormant
op
pending km relocation line 2009 of rail
April Developme Pre-stripping dewatering and 3
KOV km 8,49 DCP Mine
op
scheduled for 2009 2009 2010 nt
April Mashamba Developme 11,04"
3
Dewatering
KCC deferred 2016 to
op
kna East Mine 2024 nt
pit open op
underground ug
mining
the licence Part of * same
Table Table of Material Proces 1.2: Assets
Sulphide 2008:562,8 2008:437,7 kt, Oxide
Operating Kamoto Concentrator KCC
kt
Metallurgical Luilu
Copper Operating cathode KCC 2008:749
Plant
Refinery WOL/SX/EW
ktpa Development 160 KCC Cu
Project
1.6 Resources Mineral and Reserves
2008, 31December Measured and Indicated KML has 297,5 Mineral of As Resources Mt of with
at
ore a
grade (Table 0,46%
4,02% of and consolidated Cu Co 3.3 KML's Mineral Resource presents statement
as
2008), of Proved December with 31 grade Probable Mineral and 139,8 of of Reserves Mt of with
a ore
(Table 4,50% and
0,44% Cu consolidated Co 1.4 Mineral KML's Reserve of presents 31 statement as
2008). December CFD-#7297524-v1
B4
Table KOL: Mineral December 1.3 Resources 31 2008 at as
Kamoto 0,58% 33,0 4,50% Measured Mine
Subtotal 0,58% 33,0 4,50%
Kamoto Mine 0,60% 35,7 4,69%
Mashamba East Mine 0,38% 75,0 1,80%
Mine Indicated T17 0,64% 13,7 3,16%
KOV Mine 126,9 0,40% 5,33%
Kananga Mine 1,61% 0,79% 4,1
Tilwezembe Mine 9,0 1,89% 60% 0
Subtotal 264,5 3,95% 45% 0
Kamoto Mine 68,7 4,60% 59% 0
Total Mashamba East Mine 75,0 1,80% 38% 0
Measured T17 Mine and 13,7 3,16% 64% 0
Mine Indicated KOV 126,9 5,33% 0 40%
Kananga Mine 1,61% 4,1 0 79%
Tilwezembe Mine 9,0 1,89% 60% 0
TOTAL 4,02% 297,5 46% 0
Kamoto Mine 0,53% 10,6 5,22%
Mashamba Mine East 65,3 0,76% 0,10%
Inferred T17 Mine 16,7 0,57% 1,77%
KOV Mine 71,2 0,32% 3,56%
Kananga Mine 4,0 0,98% 2,00%
Tilwezembe Mine 0,62% 13,1 1,80%
TOTAL 180,7 2,32% 0,31%
(1) Mineral reported have been Resources accordance with the in the classification South criteria of
Code Reporting African for the of Mineral Mineral Code). Resources and (the SAMREC Reserves
(2) inclusive Mineral Mineral of Resources Reserves.
are
(3)
Mineral
Mineral Resources viability. and have Reserves do demonstrated econotnic not not are
Table
1.4 KOL: Mineral December Reserves 31 2008 at as
Proved Mine Kamoto 17,0 3,52% 0,51%
Subtotal 17,0 3,52% 0,51%
Kamoto Mine 19,4 3,70% 0,53%
Mashamba Mine East 10,2 4,39% 0,52%
Probable Mine T 17 3,1 2,67% 0, 70%
KOV Mine 90,1 4,93% 0,38%
Kananga Mine 0,0 0,00% 0,00%
Tilwezembe Mine 0,0 0,00% 0,00%
Subtotal 122,8 4,64% 0,43%
Kamoto Mine 36,4 3,62% 0,52% CFD-#7297524-v1
-B5
4,39% 10,2 0,52% Mashamba East Mine Total
0,70% 2,67% 3,1 Mine T 17 Proved and
0,38% 90,1 4,93% KOV Mine Probable
0,00% 0,00% Kananga 0,0 Mine
0,00% 0,00% 0,0 Tilwezembe Mine
139,8 0,44% 4,50% Total
reported (1) been accordance the Mineral have with classification criteria of the South African Reserves in
Reporting Code). Code the (the of Mineral and Mineral for Resources Reserves SAMREC
(2) inclusive Mineral Mineral of Resources Reserves. are
Interpretations Conclusions 1.7 and
exploration interpretations reported results and of Material The elsewhere this the Assets in
report on are
compile relied and Mineral included have been the the Combined Resource in of Item 19 to statement upon
Report. Technical
Recommendations 1.8
required future Recommendations work included other the technical for items in this in
report. assets on are
Specific recommended
action programs are:
Dewatering;
required believes that additional work SRK demonstrate correlation between is the to
model field and observations and data:
analysis clearly required should be undertaken the A still information that is state to gap
assumptions example, and that have been calibration of the model. used in the how For
recharge the value used in determined? the model was
dewatering longer been by that has stated lead AGES there will be It time for be
to now a
pit
going effective the southern the for of the north. is This scenario
part cut to as now
modelled needs be demonstrate that the this is fact in to to case.
aquifer packer testing The testing determined from and/or specific for parameters pump
stratigraphical should be model units built into detailed level fed the and back
on a more
hydrogeological the detailed conceptual into model.
hydrogeological conceptual Using the detailed model, phreatic position the the of more
heights potential high surface and faces of the the walls should in be simulated seepage
geotechnical within different domains.
position phreatic (hydraulic The of the head) quarterly surface intervals the first for 24 at
modelled, by months annually needs be position followed its mine. for the life of The to
achieving probability phreatic of these determined. also surfaces be must
drilling Additional testing and should undertaken be establish does that the RAT to pump
impermeable fact form regional groundwater in barrier for flow this
is critical
an as a
assumption in the model.
updated drilling should The being currently be the model data from with undertaken to
demonstrate that aquifer the the Musonoi being the side of River is in fact eastern on
dewatering impacted by the resolving KOV. This data of be critical will the issue of in CFD-#7297524-v1
-B6
dewatering
in of flow should be used refine the the the into KOV and strategy to source
future.
in-pit Additional should be the boreholes be scenarios risks if
not to to prove run assess o
possible partially only possible pit bottom becomes the pumping and from the of the or
dewatering long will primary method. how take of it draw down the An assessment to
phreatic assuming only required, passive dewatering pit surface around the is i.e.
pumping pit only. the from sump
Kakifuluwe The real and measured losses from the Musonoi catchment into the River c)
incorporated should be into the model.
expected groundwater
undertaken impacts the needs be if of An
assessment to users on o
the the inflow into KOV from side the River. of of Musonoi part east comes
Geotectmical;
Further studies should be carried rock the the chracteristics associated with
out o on
Material Assets.
Tailings
fully
physical carried chemical Further studies should be characterise and the to; out o
deposition, properties tailings investigate possibility the end of the of streams, open
geology investigate hydrogeology further Mupine and characterise the and Pit at to
potential materials. construction
undertaking Engineering provided study, with and has relied In the Bateman has been
upon
supplied records, by parties. client documents other information the and third and other Save
as
expressly Engineering verify stated this has assumed and in Bateman did the report, attempt not to
sufficieny reliability,
validity information,
such records documents. of data and
accuracy,
or or
recommends: Bateman therefore
properties; Repeat testwork all mineral for
capital plant sizing configuration, Additional work the WOL/SX/EW well the of the and
on as as
operating and and costs;
capital operating Additional work the and estimates. cost on
Analysis 1.9 Economic
(Table capital sensitivities discount grade 1.6); 1.5) prices (Table This metal section for and presents rates
a
1.7) (Table operating (Table 1.8). ("NPVs") The Values and should be considered Net Present cost costs
only relation the risks project. associated this with in to
Table 1.5 KOL:
8,00% 1,027
10,00% 624
12,00% 324
14,00% 99
16,00% (7O) CFD-#7297524-v1
-B7
(197) 18,00%
(292) 20,00%
Table and Grade Revenue 1.6
Commodity Revenue
10% 20% 30% O% -15% -10% -5%
Price
5,49% 5,95% 4,50%* 5,03% 3,89% 4,12% 4,35% (Cu %) Grade
0,48% 0,52% 0,57% 0,41% 0,44%* 0,37% 0,39% (Co %) Grade
(10) 242 312 99 171 Grade 27 63 Revenue
Grade Reserve *
Table Revenue Cost 1.7
630 702 773 842 521 558 594
667 345 382 418 454 526 597
241 278 350 490 421 168 205
(10) 242 312 27 63 99 171
(118) (48) (370) (333) (297) (261) (189)
(487) (665) (557) (738) (701) (629) (417)
(sty) (797 (1,135) (1,o87) (1,047) (1,009) (937)
Table and 1.8 Revenue Cost Sensitivit,
248 284 321 357 429 499 569
199 235 484 343 414 162 271
185 257 328 398 76 113 149
(10) 27 63 99 171 242 312
(109) (145) (182) (72) (1) 140 70
(353) (317) (280) (32) (173) (102) (244)
(274), (525) (489) (452) (416) (344) (204)
Legal*4093000.3 CFD-#7297524-vl