Commodities Buzz: Katanga Mining Provides Update On KCC Recapitalization

Katangas 75% DRC operating subsidiary Kamoto Copper Company (KCC), has commenced legal proceedings in the DRC to dissolve KCC following KCCs failure to address its capital deficiency or, alternatively, if the Court provides KCC with a period of time within which to regularize the situation, to request the appointment of an expert to assess and report to the Court on KCCs financial position and recapitalisation plan.

Katanga believes that it has several options to remedy KCCs capital deficiency and avoid KCCs dissolution. Katanga will continue to attempt to engage in discussions with Gn++camines and will take all other necessary steps to ensure the continuation of the operations of KCC and protect its rights under the law and under its joint venture agreement with Gn++camines.

Katanga is continuing to assess options for regularising the capital deficiency, including the conversion of a portion of existing intercompany debt owed by KCC to Katanga (which is eliminated on consolidation) into equity or forgiving a portion of such debt. Any such outcome would impact the distribution of future cash flows earned by KCC, which might in turn have a materially adverse impact on Katanga but would not be expected to have a material impact on the assets, liabilities and net assets of Katanga and would be expected only to result in a shift within equity attributable to shareholders and non-controlling interests. The regularisation of the capital deficiency can be effected by Katanga on its own initiative or through negotiation with Gn++camines.