Kansanshi gets sweeter

Production from the Kansanshi copper mine in the North-Western province of Zambia has come along just in time for First Quantum Minerals (FM-T, FQVLF-O), which posted net earnings of US$54.8 million (US86) on revenues of US$187.1 million in the first quarter of the year.

The earnings represent a year-on-year doubling of first-quarter earnings for the company, which started production from Kansanshi in April 2005. In the first quarter of 2005, First Quantum made US$27.2 million on revenue of US$38.2 million.

Kansanshi was the big revenue-earner for First Quantum, pulling in US$124.9 million from production of 15,796 tonnes copper, while the Lonshi mine in the Democratic Republic of the Congo and the Bwana Mkubwa solvent extraction-electrowinning plant across the border in Zambia produced 11,718 tonnes copper, taking in US$68.1 million.

First Quantum’s cash costs averaged US$1,785 per tonne (US81 per lb.) with Kansanshi at US$1,410 and Bwana Mkubwa at US$1,985. The first quarter is the wet season in the African Copper Belt and costs typically rise, but the past quarter was one of the wettest on record.

The company realized an average of US$4,982 per tonne (US$2.26 per lb.) from copper sales.

A 4-million-tonne sulphide treatment circuit has been commissioned at the Kansanshi plant, and equipment was purchased for a high-pressure leach circuit, which will treat sulphide concentrates to produce 35,000 tonnes of copper yearly.

A gravity concentrator, added to the Kansanshi plant during the quarter, recovered 28 tonnes of concentrate containing just over 3,000 oz. gold. That concentrate has been held in inventory by the mine.

The slow progress of a rebuilding program at the Mufulira copper smelter, where Kansanshi sends most of its concentrate, weighed on both revenues and costs at Kansanshi. The mine had to hold back over 4,000 tonnes of concentrate — representing revenue of around US$17 million — because a spot buyer capable of taking the concentrate could not be found on the Copper Belt. Freight charges to ship concentrate offshore are also increasing Kansanshi’s costs, and Kansanshi is currently delivering into smelter contracts with high price-participation charges that factor into operating costs. The longer-term contract with Mufulira is more favourable to the miner.

Mufulira, owned by First Quantum, metal trader Glencore International, and Zambia Consolidated Copper Mines, was scheduled to have its rebuild finished by mid-2006.

First Quantum’s Guelb Moghrein copper project in northwestern Mauritania is expected to be commissioned in the second quarter of the year, with commercial production in the following quarter. Equipment is being installed in the mill buildings and a mining licence is awaiting final approval of the project’s environmental and social impact assessment. Early stage stripping and some mining has been done.

Guelb Moghrein is slated to produce 30,000 tonnes copper and 70,000 oz. gold annually once it is in commercial production.