Optimism for Anvil despite election delay

[miningmx.com] — BUSINESS for Australian-listed Anvil Mining is somewhat complicated at present with the elections in the Congo where Anvil digs for copper an inconvenient distraction.

The company is facing an audit by Gecamines, the state-owned mining company, of its mining lease agreement – a development that is holding up the proposed $1.3bn takeover of Anvil by China’s Minmetals.

Sources say Gecamines officials have been available but the politicians have not yet been able to roll up their sleeves, not until the elections are finalised.

The World Bank is preparing for the likely return of Joseph Kabila to a third stint as president. It may be by a smaller majority, but assuming there’s no significant civil disruption, Anvil isn’t ruling out completion of the the Minmetals deal before year-end. That might be a push, but there’s optimism in the Australian company’s camp.

In terms of the 2009 lease agreement, Anvil agreed to pay rent to Gecamines of 2.5% of gross turnover whereas previously the deal was rent paid on a sliding scale but which was capped. Given the acceleration of the copper price, you can see why Gecamines wanted upside from Anvil’s production.

One difficulty of the mining lease audit is that it’s a Gecamines initiative to establish financial independence. “Gecamines wants to become a commercial entity, but it has only one shareholder,” is how one source described the situation. It’s akin to teenage rebellion.

What should have been a two-way discussion has become a three-way debate. “Anvil isn’t caught by this, it’s just the situation. I think it and Minmetals have a close understanding of what they want to do and they’re dealing with it,” a source close to the companies said.

“I’d be surprised if Anvil get 100% of what they want; I’d also be surprised if Gecamines completely gets what it wants,” he said.