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Zambia Copper Invs (ZCI)

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Friday 15 March, 2002

Zambia Copper Invs

Final Results

Zambia Copper Investments Ld
15 March 2002



                                 Press Release


                       ZAMBIA COPPER INVESTMENTS LIMITED


                            (Registered in Bermuda)

                            ('ZCI' or the 'Company')


Audited financial statements for the year ended December 31, 2001

Basis of preparation of consolidated financial statements

On January 24, 2002 the Company issued an announcement to the effect that,
following advice from Anglo American plc, it would not be in a position to
provide funding to its principal subsidiary, Konkola Copper Mines plc ('KCM'),
beyond its obligations under the Subscription and Shareholders Loan Agreement
('SSLA'). Furthermore, the Announcement stated that KCM's financial projections,
that are based on current metal prices, indicate that in order to sustain its
operations KCM will require funding, over and above that pledged under the SSLA,
from around the end of the first quarter of 2002.

A KCM Shareholders' Steering Committee has been established on which are
represented KCM, ZCCM Investments Holdings plc, the Company, International
Finance Corporation, CDC Group plc and the Government of the Republic of Zambia.
Financial and technical advisors have been appointed and restructuring proposals
are being considered which, if successful, could lead to KCM being better able
to attract additional finance in the form of new equity or debt, to finance its
future operations. The continued operation of the Company is dependent on KCM
continuing to operate on a going concern basis.

The financial statements have been prepared on a going concern basis in
accordance with International Accounting Standards on a basis consistent with
the previous year. If further financing does not, however, become available for
KCM from around the end of the first quarter of 2002, it is likely that the
Company will not be able to continue as a going concern and that the assets
reflected in the Consolidated statement of financial position will be
significantly impaired. The Audit Report contains a disclaimer with regard to
the Company's ability to continue as a going concern.



Consolidated statement of earnings                 2001               2000

for the year ended December 31, 2001             in thousands of US dollars

Turnover                                        370,689             229,004

    Operating costs                           ( 454,137)           (238,160)

                                            ___________          ___________

Operating loss before interest and taxation     (83,448)             (9,156)

Interest and other financial income               6,300               1,886

Interest expense                                (21,916)             (9,676)

Commitment fee on loan facility                  (1,680)             (1,676)

General and administration expenses              (1,638)             (1,163)

Share of Konkola Project consortium expenses          -              (2,878)

                                            ___________          ___________

Loss before tax                                (102,382)           (22,663)

Taxation                                         (3,883)             3,522

                                            ___________          ___________

Loss after taxation                            (106,265)           (19,141)

Loss attributable to minority interests          20,296              3,329

                                            ___________          ___________

Net loss                                        (85,969)           (15,812)
                                            ___________          ___________

                                              per ordinary share in US cents

Headline loss before exceptional
items and amortisation of goodwill               (69.68)             (12.56)

Net loss                                         (70.14)             (12.90)

Consolidated statement of retained earnings        2001                2000

for the year ended December 31, 2001             in thousands of US dollars

Accumulated deficit at beginning of the year    (21,793)             (5,981)

Net loss                                        (85,969)            (15,812)
                                             ___________         ___________

Accumulated deficit at end of the year         (107,762)            (21,793)
                                             ___________         ___________

No dividends were paid or proposed by the Company in respect of the year ended
December 31, 2001.



Consolidated statement of financial position       2001               2000

as at December 31, 2001                          in thousands of US dollars

Fixed assets

Intangible assets                                 8,265              5,998

Deferred tax asset                                    -              3,794

Tangible fixed assets                           260,756            174,623
                                            ___________         ___________

                                                269,021            184,415

Investments and advances                         45,932             35,879

                                            ___________         ___________

                                                314,953            220,294
                                            ___________         ___________

Current assets

Stocks                                          105,462            112,887

Accounts receivable                              68,924             26,435

Cash and short-term investments                   4,772             28,314
                                            ___________         ___________
  
                                                179,158            167,636
Current liabilities

Short term loans and bank overdrafts            (98,566)           (17,859)

Accounts payable and accrued liabilities        (62,172)           (65,584)
                                            ___________         ___________

                                               (160,738)           (83,443)
                                            ___________        ___________

Net current assets                               18,420             84,193
                                            ___________        ___________

Total assets less current liabilities           333,373            304,487

Long term liabilities

Long term loans                                (263,346)          (120,091)

Provisions                                      (69,451)           (79,112)

Deferred purchase consideration                 (61,557)           (60,000)

Minority interest                                     -            (20,296)

Net (liabilities) / assets                      (60,981)            24,988

Capital and reserves         
     
Capital                                          46,781             46,781

Accumulated deficit                            (107,762)           (21,793)

Shareholders' (deficit) / equity                (60,981)            24,988


Consolidated statement of cash flow               2001               2000

for the year ended December 31, 2001            in thousands of US dollars

Cash flow from operating activities

Cash received from customers                    361,945            213,990

Cash paid to suppliers and employees           (465,756)          (229,000)

                                            ___________         ___________

Cash absorbed by operations                    (103,811)           (15,010)

Interest received                                   356              1,461

Interest paid                                    (5,314)              (583)

Income tax paid                                    (351)               (28)
                                            ___________         ___________

Net cash absorbed by operating activities      (109,120)           (14,160)
                                            ___________         ___________

Cash flow from investing activities

Investment in KCM                                (2,832)            (4,594)

Acquisition of assets from ZCCM                       -            (30,000)

Capital expenditure                            (107,297)           (71,185)

                                             ___________        ___________

Cash absorbed by investing activities          (110,129)          (105,779)

                                             ___________        ___________

Cash flow from financing activities

Proceeds from external borrowings               154,000             96,000

Advances by minority shareholders in KCM         21,000             11,250

Equity subscriptions by minority shareholders         -             11,250
                                            ___________         ___________

Net cash from financing activities              175,000            118,500

                                            ___________         ___________

Net decrease in cash                            (44,249)            (1,439)

Cash at the beginning of the year                10,333             11,772

                                            ___________         ___________

Net (debt) / cash at the end of the year        (33,916)            10,333

                                             __________          __________

Cash deposits and cash at bank                    4,650             28,192

Bank overdraft - unsecured                      (38,566)           (17,859)

                                             __________          __________

Net (debt) / cash at the end of the year        (33,916)            10,333

                                             __________          __________

Chairman's Statement

On October 12, 2001, ZCI issued a press release stating that, in view of the
outlook for the copper and cobalt price and the inability to raise the required
limited recourse project finance, its operating subsidiary KCM had advised the
Zambian Government that it was unable to proceed with the Konkola Deep Mining
Project. As stated in ZCI's press release dated January 24, 2002, Anglo American
plc, ZCI's 50.9% shareholder, subsequently advised the Company that in the
absence of the Konkola Deep Mining Project, it could not justify providing
funding to ZCI beyond that committed at the time of vesting of the former Zambia
Consolidated Copper Mines Limited assets.

Given KCM's requirement for additional funding during 2002, the future of both
ZCI and KCM as going concerns is currently unclear. A KCM Shareholders' Steering
Committee has been established with representatives from ZCI, the International
Finance Corporation, the CDC Group plc, ZCCM Investments Holdings PLC and the
Zambian Government to evaluate all options. ZCI has engaged NM Rothschild & Sons
as financial advisors and MRDI as technical advisors to assist with this
process.

During 2001, ZCI incurred a net loss of US$86 million due to low copper and
cobalt prices and operational difficulties at KCM. The copper price declined for
much of the year reaching a low of 59.9 US cents per pound in November following
the terrorist attack in New York. This is the lowest price for 15 years in
nominal terms and the average price for the year of 71.6 US cents is the second
lowest in real terms in the last one hundred years. The low prices coincided
with a time when the benefits of the refurbishment programme at KCM had still
not been fully realised, and operating costs remained high. Although cash
operating costs have reduced from over 100 US cents per pound of copper at the
time of vesting to an average level of 85 US cents per pound during 2001, KCM
is, and without the Konkola Deep Mine will remain, a high cost producer.

During the year ended December 31, 2001, KCM continued with the refurbishment of
the assets. By year end, some US$178 million had been spent on the programme
which was designed to address the severe under-investment which had occurred
over many years. KCM committed in the Development Agreement to capital
expenditure in the first three years post acquisition of US$208 million in
January 2000 money terms. That commitment will shortly be fulfilled.

Copper production for the year was 196,805 tonnes, 18% higher than in 2000 on an
annualised basis but still below target, principally due to problems at the toll
smelting facility at Nkana, delays in underground development at Konkola and the
impact of the Nchanga open pit slope failure.

The Nkana smelter was shut down during July and August for a major overhaul but
there continued to be intermittent problems with the oxygen plant, which
constrained output. At Konkola, deteriorating ground conditions have given rise
to the requirement for additional support and development work has fallen behind
schedule. As a consequence, Konkola has not achieved the expected increase in
production.

The catastrophic slope failure at the Nchanga open pit with the tragic death of
ten employees was reported in detail in the Interim Report. A further eight
employees suffered fatal accidents in unrelated incidents during the course of
the year. Despite this unacceptable record on fatalities, safety standards and
safety risk awareness amongst employees and contractors have improved. The Lost
Time Injury Frequency Rate fell considerably during the year to average 0.47 per
200,000 man hours in the last quarter of 2001, down from 2.14 for the quarter
following vesting. KCM also made significant progress on the community health
campaigns initiated in 2000 to combat malaria and HIV/AIDS.

As at December 31, 2001 ZCI had provided US$190 million to KCM under its US$310
million share of the US$370 million shareholder facilities. Since year end ZCI
has provided a further US$94 million to KCM of which US$70 million has been used
by KCM to repay bank loans. Absent new financial facilities, KCM will fully
exhaust its cash resources around the end of the first quarter of this year. ZCI
will in turn have fully drawn down its loan facility from Anglo American plc,
which Anglo American has advised it will not increase.

Negotiations with all stakeholders are currently taking place through the KCM
Shareholders' Steering Committee with the objective of putting each of ZCI and
KCM on a sound financial footing with KCM maintaining operations on a going
concern basis. However, there can be no assurance that such negotiations will
lead to new financial facilities being made available to KCM.

I wish to record my appreciation of the continued efforts of all the employees
of KCM in extremely difficult circumstances and pay particular tribute to Tim
Wadeson, who was Chief Executive of KCM from the time of vesting until his
retirement at the end of 2001.

S R Thompson

Chairman

Operating statistics for KCM for the year ended December 31, 2001


                                      Year ended             Nine months ended

                                December 31, 2001             December 31, 2000

Ore processing

Copper ore milled (t)                 9,227,000                    6,465,000

Cobalt ore milled (t)                   794,000                      789,000

Metal in concentrate

Copper (t)                              138,310                       93,711

Cobalt (t)                                3,272                        3,129

Finished production

Copper (t)                              196,805                      125,385

Cobalt (t)                                2,422                        1,659

Metal sales

Copper (t)                              196,231                      107,607

Cobalt (t)                                2,678                        1,114

Average price realised

Copper c/lb                                  75                           84

Cobalt US$/lb                                 8                           11




The Company's annual report at December 31, 2001 will be posted to shareholders
on or about March 21, 2002. Copies may be obtained from the transfer agents, 
Computershare Services Limited, Second Floor, Edura, 41 Fox Street, Johannesburg 
2001 (PO Box 61051, Marshalltown 2107) South Africa and Computershare Investor 
Services PLC, PO Box 82, The Pavilions, Bridgwater Road, Bristol BS99 7NH
or from the Company's French Listing Agents, Euro Emetteurs Finance, 48
boulevard des Batignolles, 75850 Paris, Cedex 17, France.

March 15, 2002

Bermuda Registered Office: Clarendon House, 2 Church Streeet, Hamiltonm Bermudq
Website: www.zci.lu



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            The company news service from the London Stock Exchange
    

FR UVOSRUSROAAR                                                                                                                                                                                                                                              

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