Katanga Mining Limited
TSX VENTURE : KAT

Katanga Mining Limited

January 25, 2006 09:15 ET

Katanga Reports 2005 Financial Results

TORONTO, ONTARIO--(CCNMatthews - Jan. 25, 2006) - Katanga Mining Limited, (TSX VENTURE:KAT) ("Katanga") announces its results of operations for the year ended September 30, 2005.

During the year ended September 30, 2005 Katanga entered into an option agreement ("Option Agreement") whereby Katanga can acquire 100% of the outstanding shares of Kinross Forrest Ltd. ("KFL"). KFL owns 75% of Kamoto Copper Company SARL ("KCC"). KCC is a Congolese joint venture company that was formed to hold 100% of the Kamoto Project's mineral reserves, mining, milling, hydrometallurgical facilities and other assets that are subject to a joint venture between KFL and Gécamines, a Democratic Republic of Congo ("DRC"). The joint venture and KCC have been formed and approved under DRC Presidential Decree. As well, Katanga completed a private placement financing in October 2004 under which it raised gross proceeds of US$898,320 (C$1,125,000) by issuing 4.5 million units at a price of US$0.20 (C$0.25) per unit. Each unit consisted of one common share and one-half of one share purchase warrant. Katanga's loss for the year, consisting primarily of general and administrative expenses, was US$49,752 (2004 - US$59,121) or US$0.01 per share (2004 - US$0.06).

Subsequent to year end Katanga completed a C$17.5 million private placement financing of 14 million common shares at a price of C$1.25 per share. GMP L.P. (formerly GMP Securities Ltd.) and Quest Securities Corporation, as co-lead agents, together with a syndicate that included Haywood Securities Inc., acted as agents in connection with the private placement. The net proceeds of the offering:

- will be used to fund the completion of the feasibility study of the Kamoto Joint Venture under the Option Agreement;

- were used to repay a C$1.0 million promissory note issued on November 2, 2005 to provide interim financing for the feasibility study; and

- were used to fund the purchase of a 23.33% ownership interest in KFL from Kinross Gold Corporation for C$5.45 million.

The Option Agreement and the Kamoto Joint Venture relate to the rehabilitation of the mines and plants located in Kolwezi in the DRC. At its peak production in 1986, Gécamines produced 476,000 tonnes of copper and 14,500 tonnes of cobalt, the majority of which came from the Kolwezi operations.

The Option Agreement requires Katanga to fund all costs associated with preparation of the Kamoto Project feasibility study. In order to exercise the option, Katanga must also arrange financing for capital needed to complete the first phase of redevelopment. It is estimated that the costs associated with the completion of the feasibility study will be approximately US$7.0 million. The consideration that must be paid by Katanga on the exercise of the option is set forth in Katanga's press release issued on August 2, 2005. The exercise of the option by the Company is subject to the further filing, review and acceptance by the TSX Venture Exchange.

Arthur Ditto, President and CEO of Katanga noted that "Katanga has made substantial progress in the past year in securing the option on the Kamoto Project. The funds from the private placement allowed Katanga to purchase its initial stake in KFL and will fund the completion of the Kamoto Joint Venture feasibility study. The feasibility study is proceeding well and the results of this study are expected by April 2006".

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Katanga Mining Limited
    Arthur H. Ditto
    President & Chief Executive Officer
    (416) 369-4340
    or
    Katanga Mining Limited
    Thomas J. Pladsen
    Chief Financial Officer
    (647) 287-3778
    www.katangamining.com