Kolwezi tailings convention signed in DRC

The Kolwezi tailings project in the copper belt region of the Democratic Republic of Congo (DRC) appears to be inching closer to production. America Mineral Fields (AMZ-T) and Anglo American of South Africa are nearing the final stages of documentation for their 50-50 joint venture to develop the copper-cobalt project, which had been stalled by political uncertainty and a legal dispute between the two companies.

Last summer, AMF and Anglo settled their dispute and formed Congo Mineral Developments (CMD) to advance the project. CMD recently signed a convention with the DRC government calling for ownership of the project to be transferred to a new company, KMT Sarl. It will be held 40% by Gecamines, a state-owned mining company, and 60% by CMD.

Anglo American has funded the joint-venture company with an initial US$16 million to complete a feasibility study and secure production financing. Once the convention is ratified by presidential decree, and once approvals from the company and their bankers are in hand, payments to Gecamines will begin.

The convention calls for the partners to pay US$130 million to Gecamines, beginning with a payment of US$25 million on transfer of the project assets to KMT Sarl. Anglo will fund CMD with the first US$75 million of payments. AMF’s share of this funding will be repaid from its share of project revenues and future equity financings. The balance will be secured from future debt and equity financing after the bankable feasibility study is completed.

At last report, the Kolwezi project hosted 104.5 million tonnes of tailings grading 1.34% copper and 0.26% cobalt. The partners envision an operation that could process 50,000 tonnes of copper and 6,000 tonnes of cobalt annually. Operating costs are not expected to exceed US40 cents per lb. copper and US$2 per lb. cobalt. The mine life is estimated to be 27 years.

America Mineral Fields also has rights to develop the Kipushi zinc mine in DRC in partnership withGecamines.