Phelps Dodge deals Kansanshi to First Quantum

Vancouver — With the ink still drying on a deal that gives First Quantum Minerals (FM-T) an 80% stake in the large Kansanshi copper-gold deposit, the junior producer has launched a feasibility study over the promising Zambian project.

“The development of a mine will use our Zambian expertise and exploit our existing Copperbelt operations and facilities,” says Philip Pascall, the company’s CEO. “With the development, First Quantum will expand its important role in the re-emergence of the Zambian Copperbelt as a leading world producer of copper.”

The property hosts an open-pit mineral resource of 267 million tonnes grading 1.28% copper and 0.16 gram gold per tonne.

First Quantum acquired its stake from Cyprus Amax, a wholly owned subsidiary of Phelps Dodge (PD-N), by paying US$50,000, assuming US$27.45 million in gross debt (US$25 million net of cash) and issuing 1.4 million shares.

Thirty days after commercial production begins, the junior producer must also pay US$25 million, less the market value at the time of 1.4 million of its shares.

Government-held Zambian Consolidated Copper Mines (ZCCM) holds the remaining 20% interest.

A bankable feasibility study is under way and is expected to be completed within a year. First Quantum expects commercial production to begin within 30 months after the study is tabled.

Lying in the northwestern portion of the country, some 15 km north of the town of Solwezi and 16 km south of the Democratic Republic of Congo border, Kansanshi is one of the oldest known mines in Zambia. Since the discovery of ancient workings in 1899, the deposit has been intermittently mined for high-grade copper from underground and open pit. The total production from the Kansanshi deposit to date is approximately 80,000 tonnes copper.

In January 1997, as part of the privatization of ZCCM, Cyprus Amax Minerals entered into an agreement with the company and the government of the Republic of Zambia to secure majority ownership of the Kansanshi project. This agreement was finalized on March 14, 1997.

Cyprus Amax, which was subsequently acquired by Phelps Dodge, completed more than 80,000 metres of drilling and produced a preliminary feasibility study in April 2000.

The Kansanshi deposit occurs within the Lufilian arc, a major tectonic province characterized by broadly north-directed fold and thrust structures. It 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 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.