First Quantum to acquire International Ballater

Copper producer First Quantum Minerals (FM-V) will acquire junior gold producer International Ballater Resources (IBA-V).

Under terms of the deal, which is expected to close in December, one Quantum share will be worth 2.75 Ballater shares.

The Vancouver-based firms are already partners in a joint venture called International Quantum Resources, which is acquiring a 51% interest in two tailings dumps in the Democratic Republic of Congo (drc) and a 14% interest in an Australian public company, Anvil Mining. The Australian firm owns the Dikulushi copper-silver project in the DRC. International Quantum is owned 70% by First Quantum and 30% by Ballater.

Construction at First Quantum’s fully owned Bwana Mkubwa copper project in Zambia is under way, and the first copper-cathode from the

10,000-tonne-per-year plant is expected in early 1998. The plant will also produce 100,000 tonnes of sulphuric acid per year.

The company is also involved, with British firm Reunion Mining, in three gold exploration joint ventures in Niger, Botswana and Guinea.

First Quantum recently arranged a US$12-million line of credit with CIBC Wood Gundy and a US$19.1-million project loan from Investec Bank of South Africa.

First Quantum is also arranging a private placement of up to 6 million special warrants at $4.25 each, for total proceeds of $25.5 million. Each special warrant would be convertible into one unit consisting of one share and one half of a share purchase warrant. Each whole warrant would entitle the holder to buy one additional share at $5 for 12 months.

Ballater owns a 95% interest in the Connemara heap-leach gold mine in Zimbabwe. Production at the mine was recently increased to 750,000 tonnes per year. The project is now expected to produce 26,000 oz. gold over an initial mine life of five years. Cash costs have averaged US$238 per oz. but are expected to drop to as low as US$192 per oz.

Connecticut-based metal traders Gerald Metals and Investec Bank recently provided Ballater with a US$3.75-million loan, repayable with gold from the Connemara mine.