Anvil Mining updates feasibility on Kinsevere copper project in DRC

Anvil Mining (AVM-T, AVM-A) has updated a preliminary study on its Kinsevere copper project based on a recent 45,370-metre drilling program that has lifted its measured and indicated mineral resource by 34% and its proven and probable mineral reserves by 32%.

Kinsevere will be Anvil’s most significant investment in central Africa – a major open pit mining operation, electric arc furnace, and a 60,000 tonne-per-year solvent-extraction and electro-winning copper plant.

The updated mineral resource estimate focused on the Tshifufia, Tshifufiamashi and Kinsevere Hill deposits, 27 km north of Lumbashi, in the Democratic Republic of the Congo’s mineral rich Katanga province.

The results show, at a 0.5% copper cut-off grade, a total measured and indicated resource of 33.26 million tonnes of oxide resource grading 3.7% copper (for 1.2 million tonnes contained copper). There is an additional 15.3 million tonnes of sulphide resource, grading 2.9% copper.

Proven and probable reserves total 25.01 million tonnes, grading 4.08% copper (for 1.02 million tonnes of contained copper).

The new feasibility study records a combined Stage I and Stage II life of operations of 16.5 years at the Kinsevere project.

These operations would mine about 25.7 million tonnes of ore and produce 882,500 tonnes of copper metal (as black copper ingots) assaying 90% to 93% copper and LME Grade-A quality cathode copper, respectively.

The project’s average total operating costs are forecast to be US99 per lb. copper produced, including depreciation and royalties (US24 per lb.).

Following the first study in April 2007, enhancements were made to the Stage II SX-EW processing flow-sheet. These included milling in raffinate and direct tailings disposal. Those enhancements caused the SX-EW capital costs to rise to US$298 million, up from the US$238 million first reported in April 2007. But the company notes in a press release that the capital cost increases have been justified by a reduction in overall processing costs by 4 per lb. copper produced, which improves the project’s internal rate of return.

Using a longer term copper price of US$1.43 per lb. copper and a discount rate of 10%, the economic analysis yielded a net present value of US$281 million, an internal rate of return of 39% and a payback period of 5.2 years.

The new feasibility study was premised on the basis that the existing Stage I Heavy Media Separation (HMS) plant will close once the Stage II plant is commissioned in 2009.

The feasibility study also takes into account that the electric-arc furnace will be converted to treat sulphide concentrates from the company’s Dikulushi mine, near Lake Mweru.

This year Anvil plans to continue drilling on the lateral extensions and at depth in the sulphide zone and complete more than 25,000 metres of drilling.

Anvil holds a 95% stake in Kinsevere, with privately held Mining Corporation of Katanga holding the rest.

The company pays corporate taxes of 30%, royalty payments to General des Carrieres et des Mines (Gecamines), the Congolese mining agency, and a 2% net smelter return to the DRC government.

The news sent Anvil’s shares on the Australian Securities Exchange up 3.67% to A$15.55 apiece, with 1.8 million shares changing hands.

Anvil’s shares on the Toronto Stock Exchange were trading up 4 apiece to $13.80, on a trading volume of 894,702.

In Toronto, the company has a 52-week trading range of $10.25 to $20.31 and has 71.1 million shares issued.

Haywood Securities of Toronto has a buy on the stock with a 12-month target price of $17.