Anvil Approves Kinsevere Expansion

With most of the initial construction complete at the Kinsevere copper mine in Katanga province, Democratic Republic of the Congo, Anvil Mining (AVM-T, AVM-A) has approved the second stage of the project, a US$238-million solvent extraction and electrowinning (SX-EW) plant.

Once built, the new plant will supersede the heavy-mineral separation plant now under construction, and take feed from open pits on the Kinsevere property, about 50 km north of the major copper mining centre of Lubumbashi. Production would increase to 60,000 tonnes per year from the currently planned 23,000 tonnes.

Anvil holds a 95% interest in Kinsevere, with privately held Mining Corporation of Katanga holding the rest. Gnrale des Carrires et des Mines (Gcamines), the Congolese mining agency, has a royalty ranging from US$35 to US$70 per tonne of copper-equivalent.

The deposit has a measured and indicated resource of 20.1 million tonnes with 4.3% copper and 0.22% cobalt in three deposits, Tshifufia, Tshifufiamashi, and Kinsevere Hill. Another 20.9 million tonnes grading 3.4% copper and 0.06% cobalt is in inferred resources. Tshifufia, which was the subject of a 17,220-metre drill campaign in 2006, contains about half the measured and indicated resource and almost all the inferred resource.

The first phase of production, using the heavy-mineral concentrator and an electric arc furnace to produce about 23,000 tonnes copper annually out of 500,000 tonnes of ore, is scheduled for the third quarter of the year. A power line from the national hydroelectric system is nearly cleared and most of the building construction is done.

Stripping and early stage mining has started at Tshifufia and Tshifufiamashi.

The second stage of production would redirect ore to an SX-EW plant, which would take two years to construct. Based on its estimated capital cost of US$238 million — about half of which goes into the SX-EW plant and half into other infrastructure, including a power-line upgrade — the project has a net present value of US$89 million at a 10% discount rate, assuming a copper price of US$2,640 per tonne (US$1.20 per lb.). It pays back in just over six-and-a-half years and has an internal rate of return of 17% over a 15-year project life.

At US$3-per-lb (US$6,600 per tonne) copper, the project’s rate of return grows to 76% and its net present value to US$1.1 billion.

The estimated minable reserve at the Kinsevere pits is 24 million tonnes, grading 4.16% copper, with an overall stripping ratio near 1. The modelled copper recovery using SX-EW is 92%, with a total cash cost (including the Gcamines royalty) of US$1,675 per tonne (US76 per lb.), about 70% of that incurred on-site.

Anvil’s 90%-owned Dikulushi copper mine near Lake Mweru produced 5,469 tonnes copper out of 87,262 tonnes of ore in the quarter ended March 31. All the ore came from existing stockpiles while underground resources beneath the open pit are developed. Anvil expects to see production from those pits in the last quarter of the year, with full production in the first quarter of 2008.

At the Kulu mine, near Kolwezi, heavy rains during the quarter evidently washed away parts of the orebody, which is hosted by unconsolidated sands and gravels. Quarterly production was only 2,572 tonnes copper, slightly over half Kulu’s normal rate. Anvil plans a resampling program downstream from the mine to find out where the eroded copper was redeposited.

Plans for an electric arc furnace at Kulu have been put on hold to await a study of a small SX-EW plant there to replace the heavy-mineral separation plant. Metallurgical tests on Kulu material indicated low acid consumption and recoveries over 90% in whole-ore leach systems.

An SX-EW plant could also reprocess wastes from the heavy-mineral concentrator, which are currently stockpiled at Kulu. There is about a 300,000-tonne stockpile of waste materials, both tailings and oversize.