First Quantum raises $35.4 million

First Quantum Minerals (FM-T) has completed an offering of 7.6 million shares at $4.05 each for proceeds of about $30.8 million.

Canaccord Capital (Europe), the agent for the offering, has exercised its full over-allotment option for a further 1.14 million shares at the same price for another $4.6 million. This brings the total proceeds generated by the offering to just under $35.4 million.

Proceeds will be used to:

• reduce debt;
• fund work at the Nkana and Mufulira divisions of Mopani copper Mines;
• fund a study of expansion alternatives for the Bwana Mkubwa copper mine; and
• fund ongoing working capital requirements and future acquisitions.

The Nkana mine lies 1 km southwest of Kitwe in the centre of the Zambian copper belt. The mine began operation in 1932 and has produced about 6 million tonnes copper. For 2001, it is expected to produce 52,000 tonnes copper and 1,700 tonnes cobalt. Operating cash costs are expected to be US77 per lb. (net of refinery and cobalt contributions). During the first three months of 2001, the mine churned out 9,922 tonnes copper and 368 tonnes cobalt. At the end of March 2000, total reserves stood at 75 million tonnes grading 2.28% copper and 0.13% cobalt.

Mufulira is located 50 km east of Chingola at the northern extension of the belt. It has been in operation since 1933 and has produced about 9.1 million tonnes copper. Production for this year is pegged at 46,000 tonnes at US69 per lb. First-quarter production tallied 8,712 tonnes copper at a cash cost of US$58 per lb. At the end of March 2000, total reserves were 27 million tonnes grading 3.04% copper.

First Quantum shares a 90% interest in the two mines with Glencore International of Switzerland (46%). State-controlled Zambia Consolidated Mines (ZCCM), the former operator, retains a 10% interest, half of which is carried freely. First Quantum, the operator, recently repaid a US$9.6-million loan from Glencore, securing its 44% stake in the properties.

First Quantum and Glencore have committed US$159 million in capital expenditures over the next three years. This is expected to boost annual copper output from the two operations to a steady 140,000 tonnes.

First Quantum also holds a 100% stake in the nearby Bwana Mkubwa copper tailings recovery project, which the company acquired in 1996. More than US$30 million has been spent constructing a modern solvent extraction-electrowinning plant and a stand-alone sulphuric acid plant to treat the material.

Since beginning commercial production in early 1998, the operation has produced about 30,000 tonnes copper cathode and 190,000 tonnes surplus sulphuric acid. In the recent quarter, the operation produced 2,323 tonnes copper and 14,642 tonnes surplus acid at a cost of US21 per lb. copper. Total operating costs averaged US69 per lb.

At last report, the tailings hosted reserves totalling 4 million tonnes grading 0.73% copper.