CUDECO SEES LIGHT AHEAD AFTER TOUGH YEAR
Written on the 14 December 2015 by Nick Nichols
COPPER miner CuDeco (ASX:CDU) is putting a tough year behind it, brushing aside the slump in resources prices with expectations that copper demand is on the rise and expected to hit its strides from 2019.
Interim chairman David Taylor, in his first address at a CuDeco annual general meeting, assured shareholders that full production is on track to begin next year.
He also says that, despite the shock departure of company founder Wayne McCrae earlier this year, the company's new management team had the goods to finish the job.
"It is no secret that 2015 has been an incredibly tough year for the resource sector," Taylor told shareholders on the Gold Coast.
"The world's top 10 miners have lost half their market value. Prices of key commodities, including copper, have hit six-year lows. We have seen job cuts, mine closures and project cancellations, as the industry adjusts to China's transition and amid a sluggish global economy.
"As an emerging miner, CuDeco is not immune to these global influences. We cannot control the price of copper or other minerals. But importantly, the board and management are aligned with the interests of all shareholders and we share both the good times and bad. Right now, the industry is suffering and we are all hurting.
"But despite the current weak sentiment and negative headlines, we know that the resource sector is a cyclical business. It will bounce back, stronger than before.
"So-called doctor copper is a bellwether for the global economy, and we know that conditions will improve in 2016."
Taylor says data from the Queensland Resources Council shows global copper demand is rising and expected to hit 28 million tonnes a year by 2020, up from 22 million tonnes in 2014.
"Resource analysts CRU have predicted a widening supply gap from 2019 due to limited production growth, with demand growth led by India, China and Western Europe," he says.
"These forecasts all point to better times ahead for the copper industry and our flagship project.
"However, since we cannot control external factors, we can only focus on what we can control: completing the construction and commissioning of our flagship project."
Taylor says pre-commissioning activities are well advanced and CuDeco is expecting to provide 'some feed onto the process plant before the end of December' Full process flow is expected by the end of February.
While McCrae was pushed out as chairman by CuDeco's major Chinese shareholders earlier this year, his former right-hand man Peter Hutchison remains as managing director. Hutchison is backed up by newly appointed general manager Mark Roberts.
"Both are highly experienced in mining operations and are focused on making Rocklands a success," says Taylor.
Since McCrae's departure, CuDeco has secured additional funding, including $30 million from Singapore-based Rich Lead Investment and $63 million through a rights issue which is close to completion.
The company's shares remain suspended pending the rights issue, although they are scheduled to resume trading on January 19.
McCrae was not present at today's meeting. He is understood to be overseas at present.
However, Taylor paid tribute to the colourful mining veteran, who he credited with bringing the company close to full production through some of the toughest market conditions over the past decade.
"The discovery of the Rocklands deposit and the company's successful growth simply would not have been possible without Wayne's tireless efforts, and I wish to thank him again for his endeavours."
Rocklands is expected to create 180 jobs in the Cloncurry region once full production is achieved and up to 400 new supporting jobs across North Queensland.
Author: Nick Nichols