Thursday, August 16

Gécamines reaches debt dispute agreement with Katanga Group

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On 12 June 2018, GÉCAMINES, together with its subsidiary SOCIÉTÉ IMMOBILIÈRE DU CONGO (SIMCO), entered into with KATANGA MINING LIMITED and some of its affiliated companies as well as their joint company KAMOTO COPPER COMPANY (KCC), a settlement agreement.

Under the terms of the Agreement, the following goals and results are targeted, among others:

KCC’s net equity will be restored in accordance with applicable laws.

KCC’s indebtedness towards the GLENCORE group will be reduced from $9 billion down to $3.45 billion as at 1 January 2018.

Interest rates applicable on intra-group loans are revised and shall no longer exceed 6% per year.

On the basis of KCC’s current business plan, as early as the 2019 fiscal year, GÉCAMINES will start, for the first time, receiving dividends, which assessed cumulated amount should exceed $2 billion over the next ten years.

The profits will allow for the payment of corporate taxes being likely to significantly contribute to the replenishment the Congolese State’s treasury.

A better valuation, in the future, of GÉCAMINES’ contribution of the copper and cobalt deposits to the partnership through a significant increase of the amount per ton of the pas de porte, from $35 to $110, and which can reach 170 USD in certain scenarios.

A significant increase of the valuation of GÉCAMINES ownership in KCC, which value was until then nil due to the high level of indebtedness of the company.

The waiver by KCC to the benefit of the JORC certified reserves amounting to 3,992,185 tCu and 205,629 tCo (the Reserves), releasing GÉCAMINES from its obligation to deliver the Reserves or, failing that, to pay a counter-value of a maximum amount of 285 million USD.

The payment by the KATANGA GROUP of a settlement indemnity ($150 million) in favour GÉCAMINES; and
The withdrawal by GÉCAMINES and SIMCO, at closing, from the judicial proceeding initiated before the Commercial Court of Kolwezi on 20 April 2018.

GÉCAMINES welcomes the outcome of the discussions with the KATANGA GROUP and its majority shareholder GLENCORE PLC, and the new foundations now set for the partnership, with a view to an effective sharing of wealth, with immediate financial benefits for all the stakeholders, and in particular the Democratic Republic of the Congo and the affected communities.

GÉCAMINES hopes that upcoming negotiations with other partners and companies will be conducted in a similar open and respectful climate, and will reach the same satisfactory outcome.

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Bontle Moeng is the Founder and Managing Director of BizNis Africa. Moeng has spent 15 years working in the digital and online media industry across Africa. She applied her trade at True Love magazine prior to discovering her passion for Investment news in key sectors across Africa. Moeng previously worked for ITWeb, Starfish Mobile Technologies, ITNewsAfrica, AVATAR Agency, eNitiate, Global Interface Consulting and Havas Johannesburg. Her primary focus is to provide solid and valuable content on investment opportunities for the ICT, Energy and Mining sectors across Africa. In addition, the online news publication assists global companies to expand their presence in Africa. Email: news@biznisafrica.co.za

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