Kilwa, Democratic Republic of Congo — Green countryside, neatly thatched African huts, and the tranquil vastness of Lake Mweru converge in this sleepy town in the southwestern DRC. As our charter flight from the regional capital of Lubumbashi circles the dirt landing strip at Kilwa,
Aboard are 250 tonnes of copper concentrate, destined for the South African copper smelting facility of Palabora in that country’s Northern Province, a stone’s throw from the world-famous Kruger National Park.
From Kilwa, it is just 50 km to Anvil’s Dikulushi copper-silver mine. The unsealed road is in excellent condition, despite the huge, concentrate-laden trucks that use it daily during wet and dry seasons alike.
But it wasn’t always like this. The first time Anvil’s managing director, William Turner, did the trip from Lubumbashi to inspect the Dikulushi target in 1996, the 400-km journey took him nine days. Admittedly, there were mechanical issues with his vehicle, which forced him to overnight at various mission stations along the way. But the almost non-existent road effectively turned the trip into vehicular torture.
The fact that one can now whistle along from Kilwa to Dikulushi in 45 minutes, crossing rivers over several reconditioned and reconstructed bridges, is evidence that someone in the region means business.
In this respect, Anvil Mining has not beaten around the bush. You have to rub your eyes and ask “is this for real?” when confronted by the world’s richest grade copper-silver deposit, which has been fast-tracked into production at low cost over a matter of months.
Justifiably happy with their achievements thus far, Turner is hosting a group of political-risk insurers, investors, a recruitment executive, and this Paydirt reporter on a 24-hour visit to Dikulushi, only days after many of us attended the annual Investing in Africa (Indaba) conference in Cape Town, South Africa.
The fact Anvil has something of a beautiful monster at Dikulushi has been well-documented. In July 2001, with a resource of 1.9 million tonnes grading 8.59% copper and 266 grams silver per tonne, equivalent to 167,000 tonnes copper and 517 tonnes silver, Anvil secured US$4.5 million in financing for the first stage of the project. A year and two months later, Dikulushi produced its first concentrate.
The mine currently produces 1,000-1,200 tonnes copper and about 120,000 oz. silver per month from an orebody with a strike length of 200 metres, pinching and swelling between 2 and 25 metres wide. The deposit dips at 80 and plunges slightly toward the east.
The mine has two blasthole rigs on site, one of which is a Tamrock Pantera Rock Pilot leased to Anvil over three years, with an option to purchase. The mining operations are contracted-out to South African operator Con Roux, which has three excavators and 15 trucks on site.
Anvil does the blasting while a contractor does in-pit drilling in order to explore for satellite structures below 100 metres. The pit’s stripping ratio in stage 1 is 8.5-to-1; in stage 2 it will be 11-to-1.
Anvil’s general manager in the DRC, Michael O’Sullivan, stresses the need to go deeper: “Every 50 metres we go down, we add a year to the mine life.”
Operations manager Denham Vickers says the orebody is predominantly chalcocite and bornite, including offside minerals such as azurite and malachite. “But as we go deeper, we’re getting out of the oxides and into predominantly sulphide.”
Vickers describes Dikulushi as “a great little orebody,” adding that budgeting and forecasting were based on a copper price of US$1,650 per tonne and a silver price of US$4.50 per oz., compared with current prices of US$2,400 and US$5.60, respectively.
There are no idle hands, as Anvil employees and contractors work at high speed to ensure that stage 2 commissioning (a ball mill and flotation circuit) takes place by June. The move to flotation should see recoveries improve to around 93% from 70%.
Foundations are being laid for several new additions, including an office block and a 4.8-MW power plant to replace the old 1.5-MW generator.
Although there has been no extravagance at the camp, accommodation is adequate and canteen facilities, excellent. The emphasis is on economizing every step of the way. For example, catering is done in-house for around US$5 per person per day, while a contractor would have cost up to five times that price, and workers’ accommodation blocks are 4-room units, which cost a fairly economical US$2,000 per room.
This is indicative of the kind of thinking behind Dikulushi and Anvil’s philosophy on developing a mine: get big by starting off modestly.
Turner says he would like Anvil to be perceived as “a small, gutsy company that makes modest claims about what it can do.”
Dikulushi had some fairly challenging logistic and political-risk issues that needed to be managed. “I think what we have done with this ‘staged development’ is to keep capital costs at a low level and, using cash flow plus additional project financing, to keep building on what we’ve got,” Turner explains. “A lot of our competitors [in the area] have tried to optimize development of their resources, but if you try to do that, you end up with a big capital cost. Some of the projects here are in the US$200-to-US$300-million-plus bracket. The problem is you can’t get that sort of money together for the Congo at the moment.
He adds: “When we did our original prefeasibility study back in 1998, the original capital cost was US$33 million, and in 2001, there was no way we could get that sort of money to develop a project in the Congo. In the end, we developed stage 1 for US$6.2 million. We have found a way to get started in this country, and to continue building the project. Stage 2 will be commissioned in June, and it will be the first time that we’re really processing this material in a way that gives us a good recovery and a high concentrate grade.
“Up until now, the project has been ‘sub-optimum’ in terms of processing the material, with the result that we have 300,000 tonnes of low-grade material sitting on the run-of-mine ore pad, which is 2.5-3% copper. We’ve paid for the mining, crushing and screening of all that but haven’t got any revenue out of it.
“When we get the ball mill in, that stuff will be fed in and we’ll get some recoveries. So our costs to date have been a little high, and that’s because we haven’t got revenues out of everything we’ve done. Once we’ve got the ball mill in, everything we take out of the pit will either go through the mill or go to waste — and we won’t touch it again.
“I guess that’s the niche we’ve carved out; the ability to get something started in a politically and logistically challenging environment, and to get it done below cost and in stages.”
Anvil borrowed US$4.5 million from Rand Merchant Bank (RMB) to develop stage 1 and so far have paid back about US$1.5 million. “They were so content with the way we were managing the project, even though we still owe them US$3 million, that they were happy to dump in another US$5 million for the next stage,” adds Turner. “The fact that we’ve been able to get RMB to support us not once but twice says something about the company.”
Apart from the imminent commissioning of stage 2, the geological, mining and metallurgical teams are sharpening their pencils and scratching their heads over another decision that has to be made by April — that is, whether to take the pit down to 150 metres or switch to a decline underground operation when the pit bottom hits 100 metres. Current drilling may provide the decision-makers with the correct option.
It is the non-mining issues that often take centre-stage in high-risk countries such as the DRC. But political spirits were lifted by the common-sense approach to development that President Joseph Kabila spoke of in his inaugural address. The son of the slain former leader, Laurent Kabila, has listened to counsel from Western ambassadors and got all the political parties around the table to maintain dialogue.
Geographically and logistically, Anvil’s projects might as well be on another continent, situated, as they are, more than 2,000 km from the northeast. There is not even a decent road between the regional Katanga Province centre of Lubumbashi and the capital, Kinshasa.
Locally, Anvil continues to build on good relationships with local and provincial authorities, while providing 120 full-time jobs directly and scores of others through contractors. The value of having a busy mining operation right on their doorstep has not escaped the attention of poverty-stricken locals, who appear highly supportive of the whirlwind developments.
The Canadian, British and Australian participants of the 1-day Dikulushi tour are unanimously impressed by the peaceful friendliness of the region, and equally impressed by the speed and success with which Anvil has accomplished its task to date.
— The author is a reporter for Paydirt magazine, which is based in Perth, Australia.
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