Vancouver — In keeping with its corporate philosophy of growth through acquisition, First Quantum Minerals (FM-T) has signed a letter of intent with Phelps Dodge (PD-N) to earn an 80% stake in the Kansanshi copper-gold deposit in Zambia.
“The deposit offers First Quantum the opportunity to expand its asset base in Zambia,” says Philip Pascall, the company’s CEO. “In developing Kansanshi, we intend to use our local expertise and exploit our existing Copperbelt operations and associated infrastructure.”
The project hosts an open-pit mineral resource of 267 million tonnes grading 1.28% copper and 0.16 gram gold per tonne gold. First Quantum will pay US$2.5 million and issue 1.4 million shares on signing a definitive agreement by June 29. Thirty days after commercial production begins, the junior producer must also pay US$25 million, less the market value of 1.4 million of its own shares.
In order to begin commercial production within thirty months of completion of the feasibility study, First Quantum aims to complete a bankable feasibility study within a year from the deal’s closing.
The deal is subject to the continued operation of underlying agreements with the Government of Zambia and stakeholder (with 20%) Zambian Consolidated Copper Mines (ZCCM).
Kansanshi is one of the oldest known mines in Zambia. It lies in the northwest, some 15 km north of the town of Solwezi and 16 km south of the border with the Democratic Republic of Congo.
Since the discovery of ancient workings in 1899, the deposit has been intermittently mined, from underground and open pit, for high-grade copper. Its total production to date is about 80,000 tonnes copper.
In January 1997, as part of the privatization of ZCCM, Cyprus Amax Minerals entered into an agreement with ZCCM and the Government of the Republic of Zambia to secure majority ownership of Kansanshi. This agreement was finalized on March 14, 1997. In April 2000, Cyprus Amax, which was subsequently acquired by Phelps Dodge, completed more than 80,000 metres of drilling and produced a preliminary feasibility study.
The deposit occurs within the Lufilian arc, a major tectonic province characterized by broadly north-directed fold and thrust structures. The arc hosts the world-class Central African Copperbelt.
The property’s geology is dominated by the northwest-trending Kansanshi Antiform, which exposes rocks of the Late Proterozoic Kansanshi Mine Formation in the core of a major refolded fold. Copper mineralization occurs both in steeply dipping, generally north-south-trending quartz-carbonate veins, and as essentially flat-lying, bedding-controlled, stratabound mineralization within altered phyllitic rocks.
The deposit has been defined in two areas — the Main zone and the Northwest zone. Supergene enrichment and subsequent oxidation of the original sulphide mineralization has produced oxide, mixed and hypogene ore types.
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