Friedland works his magic at the PDAC

Legendary mining promoter Robert Friedland is looking to strike it big again — this time with Ivanplats’ (IVP-T) high-grade precious and base metals projects in Africa.

Speaking to a packed room at the recent Prospectors and Developers Association of Canada convention, Friedland — a billionaire who has a knack for uncovering and developing lucrative deposits, such as the Voisey’s Bay nickel sulphide deposit in Labrador, and more recently the Oyu Tolgoi copper-gold porphyry in Mongolia — was “scheming” to boost Ivanplats’ share price ahead of completing the second half of his company’s initial public offering  (IPO) last October on the Toronto Stock Exchange. The IPO raised US$308 million in what was Canada’s largest mining IPO since 2010.

Ivanplats, previously known as African Gold, began scouring South Africa for minerals in 1994, and two years later expanded its efforts to the Democratic Republic of the Congo (DRC).

After 19 years of exploration and wheeling and dealing, the company has put together an intriguing trio of assets.

Ivanplats owns 90% of the Platreef platinum-group-metals, gold, nickel and copper project in the northern limb of the Bushveld igneous complex in South Africa.

Friedland says the project could revitalize the country’s troubled platinum industry with its favourable geology. 

“We’ve discovered something that is really good,” he said, explaining that the project’s underground Flatreef zone is virtually flat and averages 24 metres in thickness.

“It’s about as thick as a seven- to eight-story building. It’s high grade and will be a negative-cost producer of platinum, palladium, gold and rhodium. It will be mechanized and it will not rely on muscle power.”

He pointed out that workers at current underground platinum mines in South Africa manually recover ore in harsh and humid conditions, something Friedland believes “is going the way of the dodo bird.”   

In contrast, he claims workers at Platreef would drive air-conditioned equipment to extract platinum safely and ethically.  

“If we are underground and our orebody is flat, we can go down to the ceiling and use rubber-tire equipment, and we have three hundred and sixty degrees of freedom.”

He pitches the project as the world’s “largest mechanizable, ethical, precious metals discovery.” 

Flatreef hosts 29.2 million oz. platinum, palladium, gold and rhodium (4PE), 1.7 billion lb. nickel and 800 million lb. copper in 223 million indicated tonnes grading 1.8 grams platinum per tonne, 1.90 grams palladium, 0.28 gram gold, 0.09 gram rhodium(4.1 grams 4PE), 0.34% nickel and 0.16% copper. It has another 44 million oz. 4PE, 2.9 billion lb. nickel and 1.6 billion lb. copper in 410 million inferred tonnes at 3.3 grams 4PE, and similar nickel-copper grades. The resource estimate uses a 2-gram-per-tonne 4PE cut-off grade.

“We are quite confident the nickel and copper values are about double what you need to recover gold, platinum, rhodium and palladium at a negative cost,” Friedland added. A Japanese consortium, led by trading house Itochu, acquired 10% of the project over 2010 and 2011 for US$290 million. 

Moving from “ethical” platinum to stellar copper grades, Friedland praised the company’s Kamoa project in the DRC as the “richest copper discovery in the world.”

Kamoa is 25 km west of the town of Kolwezi in Katanga province, and 270 km west of Lubumbashi, the provincial capital.

It sits in a previously unknown western extension of the Central African Copper Belt, famed for  hosting large copper deposits such as Kolwezi and Tenke Fungurume. Kamoa is Katanga’s first major copper discovery since the early 1990s.

Uncovered in 2009, Friedland said Kamoa was “hiding under a blanket of sand” ranging up to 10 metres in thickness, and that “it was hiding a beautiful, naked woman sleeping under that blanket, until now.”

Using a 2% copper cut-off grade, Kamoa hosts 36.9 billion lb. copper in 550 million indicated tonnes at 3.04% copper, and 5.4 billion lb. copper in 93 million inferred tonnes at 2.64% copper.

According to a 2012 preliminary economic assessment (PEA), Kamoa could produce an average of 143,000 tonnes copper a year in its first 10 years, using an initial mining rate of 5 million tonnes per year. Costs for the first 10 years are pegged at US95¢ a lb., after acid credits. The proposed underground mine has an estimated
61-year life.  

However, preliminary work shows that the initial mining rate could be boosted to 7.5 million tonnes per year to make better use of capital. Start-up costs for Kamoa are slated at US$2 billion.

Ivanplats intends to complete an updated PEA by April, followed by a prefeasibility study in the third quarter. It has 58,000 metres of drilling scheduled for 2013 to early 2014 to better delineate the deposit.

Ivanplats holds 95% of the asset, while the Congolese government owns the rest.

DRC’s Katanga province also holds Ivanplats’ 68%-held Kipushi zinc-copper project, located near the Zambian border. State-owned miner Gecamines holds the remaining 32%. Ivanplats bought the asset from a company associated with controversial Israeli middleman, Dan Gertler, for an amount estimated at US$175 million.

The project, long ago known as the Prince Leopold mine, has a historic production of 60 million tonnes grading 11% zinc, 7% copper and 278 tonnes of germanium, from 1924 to 1993.

While Kipushi has high copper grades and produced 75% of the germanium ever mined on earth, Friedland says he’s more excited about the zinc values, which average 45% at the project’s unmined Big Zinc deposit.

“This is solid metal . . . at 90¢ zinc, every cubic metre of this rock has $4,000 worth of zinc, never mind the copper, lead and other ancillary metals.”

He added that “zinc is the world’s most important fertilizer,” and argued that there would be a shortage of zinc when Century — the world’s largest zinc mine, operated by Pasminco in Australia — is mined out and closes in three years.

“So we will have a big rally in the price of zinc in two years, and we are ready to fill that [void] with the richest zinc mine in the world.”

The company is refurbishing the shaft and de-watering the mine down to 1,250 metres before beginning underground drilling in the third quarter.

While the DRC is known for its hostile business environment — for example, kicking out copper miner and one-time Kipushi part-owner First Quantum Minerals (FM-T)  — Friedland says his team is no stranger to adversity.

“We’ve worked before under difficult circumstances in the Gobi desert,” he noted, referring to Oyu Tolgoi’s development. “A gazillion analysts said it couldn’t be done, but we’ve built it, it’s there. It’s producing copper and gold today, and in the near future it will be the largest copper-gold porphyry in the world.”

Friedland called Ivanplats “the world’s largest junior company,” and said it would conclude its IPO soon. Ivanplats closed March 11 at $4.47, with 405 million shares outstanding.