Copper load of that

For the last few years the mining industry has played host to a twisted game of ‘survival of the fittest’ or, in some cases, ‘who dares wins’. Fortunately, Weatherly International came out shining in both categories, although they freely admit, it was tough back there…

Light at the end of the tunnel

“Close to the wall? We were looking over the edge—fortunately we didn’t get pushed over!”

My, what a refreshing piece of honesty from Weatherly’s man for all seasons, Rod Webster. The Chief Executive Officer, who is sitting in an inspiring office in the heart of London’s Piccadilly, has been philosophical about the company’s rocky road to recovery over the last couple of years. The company’s story, however, serves to illustrate that with enough passion, commitment, courage and luck, it is possible to come back from the brink.

When the crash came in 2008 Weatherly had four operating copper mines in Namibia, all of which had to be temporarily closed while the company weathered the storm. It was a case of downing tools, diving for cover and waiting patiently until the sun started to shine on the industry once more. While this was happening it was vital that the company shored up its defences. Indeed, just when things were looking very ominous Weatherly was, at last, anointed with the stroke of luck that, for a business, can be the difference between life and death.

The saviour came in the unlikely form of an innocuous smelter. The facility had not been considered particularly core to the business when suddenly a very interested buyer emerged. It was the deal that would galvanise the company and give it the vital financial impetus needed to continue trading.

Webster explains: “We survived because we found a buyer for a smelter that, quite honestly, had been a loss-making environmental liability. Remarkably, we found the one company in the world that actually needed it—a precious metals operator in Bulgaria. We ended up selling it for $55 million—it had been on our books for five!”

“Everyone was happy. Their share price doubled and we had the ability to get out of jail and drive the company forward,” he added.

Fortune favours the brave

Once the dust had settled Weatherly realised that the economic meltdown had actually been a perfect storm. Although it couldn’t have hit at a more vulnerable time, being a small company is was easier to react quickly, even with strict labour legislation.

The company shut the mines down quickly and was able to refinance after the smelter jackpot. This bought enough time to keep the creditors at bay, but the balance book still took quite a hit.

“Shutting down is a very expensive exercise costing 8-10 million US dollars. Reopening commands a similar sum. The whole process is also very traumatic in terms of social upheaval in Namibia. Letting 600 people go has a massive domino effect. It’s not like a gold mine—copper mines have a huge infrastructure requiring manpower, rail travel and ports infrastructure, and all these industries take a big hit.” said Webster.

The bright side

Mining companies very rarely get the opportunity to clean the sheet and start completely from scratch, but that is exactly what Weatherly had to do. At that crucial point in time four years ago the company had two and a half years of operating experience in a tough political and industrial climate to reflect on. Meanwhile, it could also identify which of its assets to concentrate on and what it could discard.

“I have to say that the vast majority of things we have done in the past would have been done differently—so now we have,” said Webster. “Very few companies get that opportunity to put together a new management team, pick the best of the workforce and put them onto flexible employment conditions.”
Weatherly has now reopened two mines which are back in production and very close to top performance. Furthermore, copper prices are also rising steadily.
“The company is close to getting into the big league. It’s not that far away—there’s loads of money around, people just need to start spending again. The next six months will be a defining period in which we reach our standard objectives. It’s a relief but, truth be told, I don’t need any more excitement in my life,” joked Webster.

Another asset the business is holding onto is a lead/zinc project which we has been fed into a new company called ChinaAfrica Resources. It is a unique joint venture which is being floated on the stock exchange at the time of writing.

Well, after a tumultuous few years things are certainly looking up.

In business, you occasionally get a mysterious dose of luck and it is difficult to explain exactly where the change of fortune came from—as Rod Webster put it, “sometimes the planets just align.”

www.weatherlyplc.com

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