Adastra lines up Umicore at Kolwezi (September 07, 2004)

Adastra Minerals (AMZ-T) and Umicore are in talks aimed at ironing out a long-term supply deal at the former’s Kolwezi copper-cobalt tailings project in the Democratic Republic of Congo.

Under the deal, the Belgian-based metals and materials group would buy cobalt from the project, which is in Katanga province. The major would also lend a hand with the project’s metallurgical flow sheet and commissioning of the cobalt circuit.

Adastra CEO Tim Read says the agreement helps bring Kolwezi closer to production, and that such offtake arrangements are essential in securing financing the project.

“We see Kolwezi as an important future supplier of cobalt metal for Umicore, and it will therefore form part of our strategy for diversifying our sources of supply,” said Umicore Vice-President Marc Van Sande.

He adds that the project has the potential to stabilize cobalt pricing and supply, which he says is essential for the continued growth of cobalt consumption, especially among makers of rechargeable batteries.

Earlier this summer, Adastra secured the unequivocal title to Kolwezi, and paid the first US$5 million payment to state-owned La Generale des Carrieres et des Mines (Gecamines); another US$10 million is due once the project is fully funded and a positive production decision is reached. Adastra owns a 82.5% stake in Kolwezi; the government and Gecamines hold the remainder.

Adastra has hired joint-venture partners Murray & Roberts and GRD Minproc Minerals to complete a definitive feasibility study at Kolwezi. Initially, the study will examine an array of production proposals, each of which reflects varying financial and marketing conditions. The study will also consider ways to improve the metallurgical flow sheet and construction schedule.

The Kolwezi project centres on two dams, Kingamyambo and Musonoi, which contain 112.8 million tonnes of oxide tailings grading 1.49% copper and 0.32% cobalt. The tailings dams are left over from the mineral concentrator facility in Kolwezi, which processed high-grade ore from the Kov and other nearby mines from 1952 onward.

Adastra figures the resource is capable of supporting annual output of 42,000 tonnes copper and 7,000 tonnes cobalt over 38 years.

Umicore owns a 5% stake of Adastra.