First Quantum 'mystified' by DRC licence loss

Allan Seccombe | Thu, 06 Aug 2009 14:15

[miningmx.com] -- FIRST QUANTUM has not been informed by the Democratic Republic of Congo authorities whether its contract for treating tailings at Kolwezi has been cancelled, said President Clive Newell.

Reuters carried a report on Thursday that deputy mines minister Victor Kasongo had told it late on Wednesday that the Kingamyambo Musonoi Tailings (KMT) contract had been cancelled because it had failed to start commercial exploitation within the agreed timeframe.

“We have not been informed of such a thing,” Newell told Miningmx. “We are looking into it. Our partners, the IFC and IDC, are also looking into and we have no clarity yet as to where this is motivated, but we certainly haven’t been informed.”

The $600m project is scheduled to be completed in April and start commissioning, producing 35,000 tonne of copper metal and up to 7,000 tonnes of cobalt hydroxide in the first year, Newell said.

KMT will produce 70,000 tonnes of copper and 14,000 tonnes of cobalt at full production.

The project has not been halted despite the questions hanging over it as part of the government’s review of all mining contracts in the DRC.

“It’s under construction and it’s above 65% complete. We are making more than progress, it’s being built at very high speed. It’s right on track,” Newell said.

First Quantum’s shares were last trading 0.2% higher on the LSE.

The International Finance Corporation (IFC), an arm of the World Bank, has a 7.5% stake in KMT and South Africa’s Industrial Development Corporation (IDC) has 10%. The DRC government holds five percent and state-owned Gecamines 12.5%.

KMT comprises two deposits, the Kingamyambo tailings dam and the Musonoi river tailings. The dam contains some 1.7 million tonnes of copper at a yield of 1.49% and 363,000 tonnes of cobalt at a grade of 0.29%.

According to the Reuters story, Kasongo said the government had given Tenke Fungurume Mining two months to complete the review of its mining contract in the DRC.

Meanwhile, Reuters reported the DRC government website as saying four other mining contracts had cleared the review. They included deals with AngloGold Ashanti, Gold Fields, Banro and Mwana Africa.

“We are pleased to note the announcement by the DRC Government that Cabinet has ratified the agreement reached in February between AngloGold Ashanti, the relevant ministries and the state-owned mining company OKIMO following the mining contract review process," AngloGold's Joanne Jones said.

"We await formal confirmation from the DRC Government of the agreement reached and finalisation of a new agreement to replace our existing mining contract.”