Investors in the Democratic Republic of Congo [DRC] have waited with baited breath to find out what will come out of the contract renegotiations with mining companies. Katanga Mining Ltd. (OTCPK:KATFF) announced its revised deal Tuesday morning, providing some potential guidelines for the other contracts. The shares fell about 10%.
Katanga's revised contract includes a change in the royalty rate from 1.5% to 2.5%. The company will also increase its board from five directors to eight, and three members will be appointed by Gécamines, the DRC's state-owned mining company and Katanga's joint venture partner. Share capital of the merged joint venture will rise to C$100-million from C$1-million.
Katanga will retain 75% of the joint venture, while Gécamines will hold 25%. That is unchanged from the previous contract.