Union Miniere buys stake in America Mineral Fields

By way of a $22-million private placement, Brussels-based major Union Miniere is acquiring a 20% interest in America Mineral Fields (AMZ-T), part owner of the stalled Kolwezi copper-cobalt tailings project in the Democratic Republic of Congo (DRC).

Union Miniere will buy 3.5 million units at $2.70 each, with a single unit consisting of a share and one warrant allowing the holder to buy another share for $3.50.

The warrants will have a life of five years and be exercised automatically once certain conditions have been satisfied, the most important being the issuance of a presidential decree from the DRC ratifying the agreements governing Kolwezi’s development.

Also, as part of the deal, a Union Miniere vice-president, Etienne Denis, will join AMF’s board.

As an indirect partner, Union Miniere will bring two strengths to the Kolwezi project: first, the company’s expertise in copper and cobalt mining, refining and marketing; and second, its long experience operating in the DRC, dating back to 1906, when the company was at the vanguard of Belgium’s colonial exploitation of the Katanga copper belt.

Union Miniere is active in the DRC through a 20% interest in the MIBA diamond mine, the largest diamond producer in the DRC, and the Kasombo copper-cobalt joint venture with state-owned Gecamines (Generale des Carrieres et des Mines).

Union Miniere’s private placement with AMF also makes unnecessary a smaller proposed financing that was to have been underwritten by AMF’s largest shareholder, Jean-Raymond Boulle of Belgium.

Currently the Kolwezi project is held 30% by AMF, 30% by Anglo American (AAUK-Q) and 40% by Gecamines. AMF and Anglo must make payments totalling US$130 million to Gecamines under the following schedule: an initial US$25 million on receipt of the decree and the transfer of project assets to a subsidiary named KMT Sarl; three equal payments of US$10 million every second month thereafter; US$40 million on completion of a bankable feasibility study and receipt of project financing; and US$35 million when metal is first produced.

The project comprises 110 million tonnes of tailings grading an average of 1.32% copper and 0.32% cobalt. The partners’ preliminary studies show low-cost recoveries of roughly 90% for copper and 70% for cobalt, which could result in annual production levels of 75,000 tonnes copper and up to 12,000 tonnes cobalt (T.N.M., May 10-16/99).

In other news, AMF has appointed a chief operating officer: metallurgical engineer Bernard Pryor, formerly of Moscow-based Western Pinnacle Mining (WPN-V).