AFRICA — First Quantum set to produce copper at Zambian mine — Reunion, First Quantum bring Ashanti to Botswanan project

Vancouver-based junior First Quantum Minerals (FM-V) soon will have two operating mines in Africa.

First Quantum’s primary project in Africa is the Bwana Mkubwa copper mine, situated within a 5,615-ha renewable mining licence near Ndola, Zambia, at the southeast end of the Zambian copper belt.

Bwana Mkubwa consists of a large open pit, which has been mined discontinuously since 1903, with the most recent production spanning the years 1971 to 1984. It’s estimated that 8.6 million tonnes of ore averaging 3.34% copper have been mined at that operation.

The mining licence also covers highly prospective ground on which limited exploration was conducted in the 1960s.

Proposed operations at Bwana Mkubwa entail the retreatment, with solvent extraction electrowinning technology, of 8.4 million tonnes of oxide tailings grading 0.73% copper.

The copper tailings retreatment plant will process 1.6 million tonnes per year, sufficient for the production of 10,000 tonnes of cathode-grade copper per year for five years. Construction is complete, and production is set to begin shortly.

The project will also include the installation of a sulphuric acid plant with a nominal capacity of 110,000 tonnes per year. Excess acid could potentially be sold to the area’s other copper producers.

Total capital costs for the copper and sulphuric acid plants are estimated at US$32 million.

An independent study, completed last year, estimates the operation will have pre-tax annual revenue, after royalties, of US$17.7 million, based on production of 10,000 tonnes of cathode copper per year and a copper price of US$1,860 per tonne.

Operating cash costs from production are expected to be US33cents per lb.

copper, excluding credits for the sale of sulphuric acid.

First Quantum anticipates that excess sulphuric acid will be purchased by other mining concerns in the copper belt for US$250 per tonne. Based on an excess production of 70,000 tonnes, potential proceeds from the sale of acid are estimated at US$17.5 million per year.

First Quantum’s other producer, its 95%-owned Connemara open-pit gold mine, once was owned by International Ballater Resources. However, First Quantum acquired that company in December.

The mine, which consists of the North and Connemara pits, is situated 250 km southwest of Harare, Zimbabwe.

The area in which the Connemara mine is situated has an extensive history of gold mining dating back to 1907. Workings prior to 1945 stretch over a 10 km north-south strike length.

Some mining and retreatment of tailings took place in the 1970s and 1980s; Ballater’s open-pit operation started up in mid-1995. Gold production at Connemara was 8,500 oz. in 1996.

In April 1996, an independent estimate pegged total resources of the various Connemara deposits at 3.32 million oz. grading between 1.19 and 1.98 grams gold per tonne. An independent reserve re-evaluation on three of the deposits was completed the following year. Reserves at the Far North pit were estimated at 350,000 tonnes grading 0.85 gram. The North pit was estimated to host 1.8 million tonnes grading 1.7 grams. Reserves at the South pit were pegged at 710,000 tonnes grading 1.7 grams.

In November 1996, an independent feasibility study confirmed the viability of tripling capacity, to 750,000 tonnes per year. That upgrade involved the construction of a new 3-stage crushing and screening plant, and the use of Vitrokele V912 resin in the gold recovery process.

First Quantum expects to recommission the upgraded operation early this year.

This year, the company expects to produce 26,000 oz. gold at a projected cash operating cost of US$192 per oz. The company has also hedged 20,000 oz. via the purchase of put options at an exercise price of US$320 per oz.

Meanwhile, in Botswana, partners First Quantum and Reunion Mining have struck a deal with the exploration arm of Ashanti Goldfields (ASL-N), whereby that company can earn up to a 65% interest in the Kraaipan gold project. That project is owned 80% by Reunion and 20% by First Quantum. Kraaipan is situated in southern Botswana, adjacent to the South African border, and covers an area of 821-sq. km.

The Kraaipan licence covers the northern extension of the Kraaipan schist belt, an Archean greenstone belt which hosts a producing mine with gold reserves in excess of 2 million oz.

The area has been subjected to only limited exploration in the past, owing to the extensive sand cover of the Kalahari Desert. However, a US$250,000 exploration program, funded by First Quantum and managed by Reunion, during the first part of 1997, identified several areas with coincidental soil geochemical and airborne magnetic anomalies. Those features will form the locus of Ashanti’s work.

Ashanti plans to spend US$250,000 on exploration during 1998 in order to earn a 20% interest. The company can increase its interest to 50% by spending a further US$500,000 in 1999. Ashanti can earn an additional 15%, for a total of 65%, by completing a positive feasibility study on a project in the licence area.

Ashanti has also agreed to fund the share of development costs of Reunion and First Quantum, subject to repayment out of profits. The agreement is subject to the approval of the government of Botswana, which retains the right to take a minority interest.

Reunion will remain manager of the exploration program until Ashanti has earned a 50% interest. Work will commence this month, with the follow-up testing existing gold anomalies and regional work in that part of the project area not already covered by soil geochemistry.