AMF now stands to earn an 87.5% interest, with state-owned Gnrale des carrires et des mines (Gcamines) retaining the balance.
In addition, AMF will pay Gcamines US$5 million once titles are transferred to the pair’s jointly held company, Kingamyambo Musonoi Tailings. An additional US$10 million is due once project financing has been completed.
The new deal replaces a previously renegotiated deal that called for AMF to own 60% of the project, with the remainder held by Gcamines. AMF was also obliged to pay Gcamines US$25 million before building a mine, followed by another US$10 million once project commissioning was completed. (An even older deal required a payment of US$130 million before commercial production.)
The new plan has yet to be approved by the boards of both companies and by the DRC government.
The latest deal coincides with a new peace plan in the Congo that calls for a unified army, part of a larger plan involving the instalation of a transitional government to reunite the country. A bitter civil war in the DRC has killed some 3.5 million people since 1998.
Says AMF President Tim Read: “With a secure title and a stabilizing political environment in the DRC, we can get on with the task of advancing this asset.”
Earlier this year, AMF struck agreements allowing the World Bank Group’s International Finance Corp. (IFC) and South Africa’s Industrial Development Corp. (IDC) each to acquire up to 10% of the project on a farm-in basis. The price tag would be based on AMF’s accumulated costs at Kolwezi at the time of the option’s exercise.
Also under the deal, the IFC and IDC have each been granted warrants to buy up to 2.5% of AMF’s common shares at 75 apiece. The 5-year warrants are exercisable after one year.
AMF plans to raise the balance of financing for Kolwezi once it has completed its ongoing bankable feasibility study.
The company still requires a presidential decree allowing production at Kolwezi.
Reserves at Kolwezi consist of 112.8 million tonnes of oxide tailings grading 0.32% cobalt and 1.49% copper (T.N.M., Feb. 10-16/03). Of that amount, 42.3 million tonnes exist in a 1.5-km-wide tailings dam; the balance is in an 11-km-long body of tailings discharged into the Musonoi River Valley.
The project is expected to produce 7,000 tonnes cobalt and 42,000 tonnes copper annually over 38 years. Capital costs are pegged at US$335 million.
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