Lundin group to take on Gecamines JV

Vancouver-based Consolidated Eurocan Ventures (KEU-V) will receive the right to a joint venture to develop the Tenke Fungurume copper-cobalt deposit in Shaba province, Zaire.

The company will have the right to negotiate a joint-venture agreement with the Zairean state mining enterprise Gecamines. It is acquiring the right from its director Adolf Lundin for 30 million shares, subject to the approval of shareholders and securities regulators. The transaction between Eurocan and its director has a value of $93 million, based on the TSE close for Eurocan on July 23.

Lundin made a successful bid for the project under the noses of South African mining houses Iscor and Gencor, both of which had also been on Gecamines’ short list.

A story originating with the Johannesburg Financial Mail said another Lundin company, International Petroleum (IRP-T), had bid successfully for a development partnership on the project. The Mail quoted Umba Kyamitala, president of Gecamines, as saying “the Tenke Fungurume project has already been attributed to a group as partner to Gecamines.” International Petroleum denied the report, saying in part that it “has no plans to expand into the mining business.” But it also announced that Lundin had been the successful bidder in Gecamines’ tender process.

Lundin has already had one recent success, the Baja de Alumbrera copper project in Argentina, now owned by Rio Algom (ROM-T).

Resource estimates for Tenke range from a minimum 50 million tonnes grading 6% copper to a maximum 250 million tonnes grading 4.5% copper. South African mining house Anglo American and its partners, Japanese trading company Mitsui and U.S. oil producer Amoco, walked away from the project in the early 1970s after spending between US$50 million and US$100 million on development.

Infrastructure and capital costs appear to be the major difficulty at the project, as it lacks both heavy-truck road access and electrical power. Most production plans call for a sulphuric acid leaching process that would require either a nearby economic source of acid or an on-site hydrolysis plant to make acid from elemental sulphur, adding to the capital costs.