First Quantum and Billiton close deal

Vancouver — London-based Billiton has completed a $1-million private placement in First Quantum Minerals (FM-V), paving the way for the junior to advance the Mwinilunga and Luamata copper projects in Zambia.

Under the terms of the financing, Billiton purchased 222,222 shares at $4.50 per share. A minimum of $1 million must be used to explore the promising properties. In return, the major has 60 days (following the exploration program) to elect to earn a direct 51% participating interest in up to three separate project areas by spending US$2.4 million on exploration over a four-year period. Each area can measure up to 500 sq. km. Billiton can then increase its interest to 70% by arranging production financing.

Phelps Dodge (PD-N) retains a one-time back-in right to acquire a 20% interest in the Mwinilunga and Luamata properties. This is exercisable when First Quantum spends US$5 million at Mwinilunga and US$2 million at Luamata. In the event that Phelps Dodge exercises this right, the Billiton and First Quantum interests will be reduced accordingly on a pro rata basis.

The two properties lie along the southwestward continuation of the Congo Copper belt in northwestern Zambia. Previous work over the ground included airborne magnetic and radiometric geophysical surveys, reconnaissance geologic mapping, soil geochemistry surveys and preliminary trenching.

Several major soil anomalies have been identified and are ready for drill-testing. At Luamata, initial trench results from a small portion of a 6-km-long soil anomaly averaged 5.4 metres grading 2.61% copper and 0.39% cobalt. The best trench contained 6.1 metres of 5.09% copper and 0.77% cobalt.