Anvil boosts Mutoshi (January 12, 2005)

Due diligence work by Anvil Mining (AVM-T) indicates the Kulumaziba coarse tailings deposit on the Mutoshi copper-cobalt project in the Kolwezi region of the Democratic Republic of Congo is of a higher grade than previously thought.

The Perth, Australia-based company says sampling of the tailings, which measure as much as 3 metres in thickness over an area up to 200 metres wide and 10 km in length, indicates an average copper grade exceeding 4%. In all, 450 50-kg samples were collected from a series of test pits dug to the original riverbed surface. The samples were reduced to 2-kg parcels and sent for assaying at A.H. Knight laboratory in Kitwe, Zambia.

At last count, the Kulumaziba deposit was estimated to contain 5-7 million tonnes averaging 2-4% copper, based on historical records, including some 140 pit-samples,. The estimate does not conform to National Instrument 43-101 standards. The tailings were originally discharged from the Mutoshi washing plant, previously operated by state-owned Gnrale des carrires et des mines (Gcamines) from 1960 to 1987.

Anvil has already paid US$3 million and issued 153,950 shares at 62 apiece to Gcamines to acquire an 87.5% interest in private Congolese-based company Emiko, which owns 80% of the project. The shares are subject to a 4-month hold period that expires on May 7. Anvil is also on the hook for another US$8.75 million in staged payments, including US$4.25 million in 18 equal monthly payments beginning four months after commercial production begins. The company plans to fast track Kulumaziba to production before the end of the year.

Plans call for processing via heavy media separation, which was successfully employed during the first stage of production at Anvil’s recently expanded Dikulushi copper-silver mine in the DRC’s Katanga Province (T.N.M., Oct. 18-24/04). Metallurgical recoveries are pegged at around 70% to produce an oxide concentrate grading about 30% copper. Perth-based Intermet Engineering has been retained to design a million-tonne-per-year processing plant. In the end, annual copper-in-concentrate production is projected at more than 25,000 tonnes.

“The Kulumaziba deposit provides an excellent opportunity for Anvil to initiate another low-capital-cost starter project, this time in the Kolwezi Region,” says Anvil’s general manager of development Mike O’Sullivan in a prepared statement. “This project has the added advantage of very low-cost mining and much better infrastructure than that at Dikulushi, including access to the national hydroelectric power grid, which passes right through the property.”

The 137-sq.-km Mutoshi project also includes the Mutoshi mine, the Mutoshi Northwest and Nioka deposits, and the Kamukonko cobalt prospect. The property also encompasses some little-explored land along the southern edge of the Kolwezi Klippe geological feature, which has potential to host stratiform copper and cobalt mineralization. The Kolwezi Klippe historically accounted for about 70% of copper production in the DRC Copperbelt.

In addition to its 20% carried interest at Mutoshi, Gcamines retains a 2% net smelter royalty (net of smelting, refining, transportation, assay and selling costs). The cost of Gcamines’ 20% interest will be carried by Anvil and will be recovered from cash flow.

In mid-December, Anvil privately placed around 5.2 million special warrants at $5.25 apiece for gross proceeds of $27.5 million. Each warrant is exchangeable for one share plus half a warrant, with a full warrant exercisable for an additional share at $6.25 per share. The warrants expire on Dec. 16, 2007, but may be accelerated if Anvil’s shares price on the Toronto or Australian stock exchanges exceeds $8 for 20 consecutive days. All of the securities are subject to a 4-month hold period that expires on April 16, 2005.