The government of the Democratic Republic of Congo has given preliminary approval to
Final approval is subject to official presentation of AMF’s contract of association with the government and state-owned Gecamines (Gnrale des carrires et des mines). The contract calls for AMF to relinquish a tax holiday for the project in return for a larger equity interest in the project. AMF stands to take an 82.5% interest, with Gecamines owning 12.5% and the government retaining 5%.
The latest approval is also subject to the incorporation of Kingamyambo Musonoi Tailings (KMT), the Congolese operating company that will hold the exploitation permit for the tailings.
Formal execution of the contract and the incorporation and transfer of exploitation rights to KMT should take several weeks.
Once the transfer is completed, AMF must pay Gecamines US$5 million, plus US$10 million once a bankable feasibility study and project financing have been completed. Gecamines is also entitled to participate in profits generated as a result of higher cobalt prices.
“This is an important step in the completion of the Kolwezi transaction and a strong reaffirmation of DRC governmental support for this important project,” says AMF President Tim Read. “The way is now clear to complete the final stages of both the feasibility study and the environmental and social impact assessment, and to seek financing.”
Reserves consist of 112.8 million tonnes of oxide tailings grading 0.32% cobalt and 1.49% copper (T.N.M., Feb. 10-16/03). Of that amount, 42.3 million tonnes exist in a 1.5-km-wide tailings dam; the balance is in an 11-km-long body of tailings discharged into the Musonoi River Valley.
The project is expected to produce 7,000 tonnes cobalt and 42,000 tonnes copper annually over 38 years. Capital costs are pegged at US$335 million.
The DRC’s Economic and Finance Cabinet Sub-committee has already approved the project.
Meanwhile, the company has agreed to a private placement of 3.5 million newly minted shares priced at $1.60 apiece with M&G Investment Managers to raise $5.6 million. AMF will apply to have the shares admitted for trading on the Alternative Investment Market. The deal is expected to close by the end of January.
In other news, AMF recently issued a call notice to the holders of warrants issued in May. The company warned that the warrants, exercisable at 75 per share, could be called in if the company’s share price averaged $1.10 or more for 20 consecutive days. In that event, the warrants’ expiry date would be trimmed by about four years to Feb. 2, 2004.
Of the 4 million warrants originally issued, about 3 million have already been exercised for proceeds of $2.2 million; 700,000 of those warrants were exercised following the call.
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