First Quantum refinances Bwana Mkubwa (July 23, 2001)

Vancouver-based First Quantum Minerals (FM-T) has borrowed US$14.2 million from KBC Bank to refinance and possibly expand its Bwana Mkubwa copper tailings recovery project in Zambia.

The debt facility, which is secured against the mine itself, carries interest at the London Interbank Offer Rate plus 2.5%, considerably less than the facility it replaced. The loan is to be repaid in 18 monthly instalments, starting this month.

A portion of the proceeds is earmarked for a possible expansion of the solvent extraction-electrowinning plant to accommodate feed from the Lonshi copper oxide deposit, about 35 km away in the Democratic Republic of Congo. The addition is expected to add several years to the operation while tripling annual production to 30,000 tonnes of Grade A copper cathode.

A scoping study is under way to determine the compatibility of the two deposits. Bwana Mkubwa generates 70,000 tonnes of excess acid yearly, meaning it would most likely remain self-sufficient.

At last report, reserves at Bwana Mkubwa topped 4 million tonnes grading 0.73% copper. Resources at Lonshi stand at 1 million tonnes grading 6% copper, though it may contain additional tonnage.

First Quantum also operates the Nkana and Mufulira mines, just northwest of Bwana Mkubwa. Ownership is divided among First Quantum, with 44%, Swiss-based Glencore International, with 46%, and the government of Zambia, with 10%.

Combined, the two mines produced 18,634 tonnes copper and 368 tonnes cobalt in the quarter ended Feb. 28. Cash costs averaged US71 per lb. at Nkana and US58 per lb. at Mufulira.

In early June, First Quantum raised $35.4 million on the market for working capital, debt reduction, capital projects at Nkana and Mufulira and and expansion study at Bwana Mkubwa. Accordingly, production and costs are expected to improve.