Solwezi, Zambia — The engineering and development contract for
The property is 65 km west of here and 220 km west of the Copperbelt.
The area is sparsely inhabited. Subsistence crop-farming takes place over a small area locally, but Equinox has negotiated compensation with the chief of the region, who has the authority to assign arable land to local inhabitants.
During a presentation at the site, Harry Michael, Equinox’s vice-president of operations, said the company expects to employ up to 1,500 people during mine construction, 20% of whom will be foreigners. During the operational phase, the number will fall to about 1,000, including about 150 expatriates.
In February, Equinox signed a memorandum of understanding with Zesco, the Zambian government’s power transmission company, for the design and construction of a 65-km 330-KV line from Solwezi to Lumwana.
The capital cost for Lumwana is estimated at US$333 million, US$37 million of which would be used to buy the mining fleet.
About 56,370 metres of core from 351 holes are being housed at the Lumwana site.
AGIP (in partnership with COGEMA) and
Equinox has worked on the property since 1999. In 2003 the company completed a bankable feasibility study, thereby earning a 51% interest from Phelps Dodge. The remaining 49% was acquired at the end of last year. Phelps Dodge retains a 1% net smelter return royalty that can be bought back for US$10.6 million to US$12.8 million.
In addition to diamond drilling, extensive reverse-circulation (RC) drilling was done.
Before Equinox became involved, 120,000 metres of drilling had been completed. Equinox drilled 65,000 metres in 632 holes, incorporating those results into the feasibility study.
Both the Malundwe and Chimiwungo deposits were first drilled by the African mining company Roan Selection Trust in the early 1960s. Roan continued exploring through to 1976, drilling 315 holes and defining a resource; core from 287 of these holes is stored at the Zambia Chamber of Mines’ Kalulushi facility.
RC samples are neatly laid out on the ground over several acres at the Malundwe RC sample farm.
The average drill hole density at Malundwe is 100 by 100 metres (100 by 50 metres in the centre of the deposit).
The Chimiwungo deposit has a measured and indicated resource of 139 million tonnes grading 0.76% copper. The Malundwe deposit is smaller, with an estimated measured and indicated resource of 130 million tonnes, but richer, with a grade of 0.99% copper.
These resource estimates are based on a cutoff grade of 0.2% copper.
Chimiwungo has a proven and probable reserve of 118 million tonnes grading 0.69% copper, whereas Malundwe has 87.3 million tonnes grading 0.94% copper.
The reserves are based on a copper price of US80 per lb.
All told, Lumwana is one of the world’s largest undeveloped copper projects.
The Malundwe deposit is 7 km northwest of Chimiwungo. Both deposits are hosted by quartz-muscovite-phlogopite-kyanite schist. Copper is primarily in the form of chalcopyrite, malachite and azurite. The Malundwe deposit contains more bornite, the bornite-to-chalcopyrite ratio being about equal, so Malundwe has a higher copper grade.
Bornite is found in the pressure shadows of kyanite, as well as disseminated in the schist and in fractures. Sulphide is coarse and strongly foliated, making it easy to crush and grind.
Chimiwungo has three stacked ore schist units with a combined width averaging 60 metres thick. On the edge of the deposit the width narrows to 5-10 metres, while in some places the width can reach up to 120 metres.
Steep faults have displaced the mineralization. The deposit dips to the west and plunges south.
The Chimiwungo deposit contains up to 1% cobalt locally, though there is no plan to extract it at present. Discrete uranium-rich zones in the Malundwe open pit will be mined and stockpiled.
The deposits are 95% sulphide, and the plan is to strip the oxide and stockpile it while the higher-grade sulphide material is processed. The oxide stockpile is expected to total 12 million tonnes grading 0.69% copper.
The first ore to be mined will be that with an elevated grade, defined by a 0.5% copper cutoff for Malundwe and 0.35% copper for Chimiwungo.
Part of the Malundwe deposit is overlain by sparse low brush, free of large trees. This is the result of elevated levels of copper and cobalt in the ground (metals which are toxic to many plants, inhibiting their growth).
Mining will begin at Malundwe, which is one continuous homogeneous deposit 4.2 km by 150 metres wide. Malundwe will be mined from two pits with a total combined dimension of 4.8 km by 0.9 km. The maximum pit-depth will be 166 metres.
Chimiwungo will be mined sequentially as three pits. Chimiwungo South has a proposed final depth of 287 metres. The expected waste-to-ore stripping ratio is 3:1.
To develop the mines, the Lumwana East River will be dammed and diverted around the southern side of the Malundwe pits. A combined water-and-tailings dam will be built upstream from these pits, and the Chimiwungo stream will likewise be diverted. Tailings will also be stored in a separate dammed area north of the project site.
A 30-tonne sample is being tested metallurgically. Earlier tests indicated the sulphide recovery was greater than 95% at 280 microns.
Malundwe concentrate is expected to grade 44% copper, whereas Chimiwungo’s will grade 32%.
The proposed plant site lies between the Malundwe and Chimiwungo deposits. Geotechnical drilling is being carried out to provide data for infrastructure placement.
The plan is to produce 125,000 tonnes of copper per year over a mine life of 17 years. Cash costs over this period are estimated at US56 per lb. copper.
The mine is expected to produce 140,000 tonnes copper during its first five years.
Equinox Copper Ventures, a Zambian unit of Equinox Minerals, has signed a letter of intent with Palabora Mining of South Africa for the future supply and sale of a portion of the copper concentrate from Lumwana. Equinox is also negotiating with other smelters regarding off-take contracts.
There are two copper smelters in Zambia. One, Mufulira, is currently working at capacity, while the other, Nkana, is being refurbished and expanded.
In addition to the Chimiwungo and Malundwe deposits, the 1,355-sq.-km Lumwana mining licence covers at least 27 main targets, only a couple of which have been tested.
One is Chimiwungo North, 300 metres north of the proposed Chimiwungo main pit and 3 km from the proposed processing plant. The target was delineated in part by a strong induced-polarization anomaly. Mineralization occurs over an area measuring 700 by 450 metres and is still open to the north and east. Chimiwungo north is at shallow depth and dips shallowly towards the south.
Four holes drilled in last year’s RC program intersected 18-44 metres grading 0.8-1% copper. A preliminary resource estimate is being calculated.
The company also holds a 10% carried interest in a Zambian copper-cobalt joint venture with Anglo American Prospecting Services, a unit of
In addition to its Zambian projects, Equinox has exploration properties in Australia, Peru and Sweden.
At the end of March, Equinox had 110.4 million shares and units issued and outstanding. The stock was recently trading at around 50.
In 2004, Equinox redomiciled from Australia to Canada, and added a TSX listing to its pre-existing Australian listing. In its initial public offering in Toronto, Equinox issued 22 million shares at 71 apiece, raising $15.6 million —
most of which was directed towards buying out Phelps Dodge’s remaining 49% interest in Lumwana.
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