* Says acceleration substantially funded by existing cash
* Shares up 30 pct on Toronto Stock Exchange (Adds details on plan; figures in U.S. dollars unless noted)
TORONTO, Sept 8 (Reuters) - Katanga Mining Ltd (KAT.TO) said on Tuesday it plans to accelerate the ramp-up of its copper-cobalt project in the Democratic Republic of Congo because of the recovery in copper and cobalt prices.
The London-based company said the accelerated development plan for the project in Katanga province will be substantially funded by existing cash balances and cash generated by operations, sending its shares up 30 percent to 72 Canadian cents on the Toronto Stock Exchange.
A one-time market darling, the base metals producer saw its shares drop 98 percent in 2008 on plunging metal prices, a freeze in credit markets and a review of mining contracts in the DRC.
In a bid to raise capital, Katanga was forced to undertake a highly dilutive deal with Glencore, an employee-owned Swiss company whose most notable holding is a stake in diversified miner Xstrata XTA.L. Glencore currently owns roughly 78 percent of Katanga’s outstanding shares. [ID:nN12346295]
Katanga’s prospects have improved significantly this year. In July, it received conditional clearance to move ahead with its mine development plans in the DRC. It also received $250 million from its financing deal with Glencore.
Moreover, the price of copper is close to $3 a pound, which is more than double the trough price seen in December 2008.
Katanga said it would refurbish existing facilities and infrastructure at the Kamoto concentrator and the Luilu refinery by the end of second quarter of 2011, instead of the first quarter of 2013 as it had previously anticipated.
The acceleration is expected to take installed copper capacity to 150,000 tons a year, from the current 70,000 tons, the company said in a statement.
$1=$1.08 Canadian Reporting by Euan Rocha; additional reporting by R. Manikandan in Bangalore; editing by Rob Wilson