Anvil updates Kinsevere feasibility

Anvil Mining (AVM-T, AVM-A) has updated a preliminary study on its Kinsevere copper project, in the Democratic Republic of the Congo (DRC), based on a recent 45,370- metre drilling program that has lifted its measured and indicated resource by 34% and proven and probable 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 electrowinning (SXEW) plant.

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

The results show, at a 0.5% copper cutoff 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 life of operations of 16.5 years at Kinsevere over two stages.

In total, the operation 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 at US99 per lb. copper produced, including depreciation and royalties (US24 per lb.).

Following the first study in April 2007, enhancements were made to the phase-2 SX-EW processing flow sheet. These included milling in raffinate and direct tailings disposal. Those enhancements pushed SXEW capital costs to US$298 million, up from the US$238 million first reported in April 2007. But the company notes 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 heavy media separation (HMS) plant will close once the second-phase plant is commissioned in 2009.

The feasibility 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 Corp. of Katanga holding the rest.

The company pays corporate taxes of 30%, royalty payments to La Gnrale des Carrires et des Mines (Gcamines), the state mining agency, and a 2% net smelter return to the DRC government.

The news sent Anvil’s shares up 3.7% to A$15.55 apiece on the Australian Securities Exchange, with 1.8 million shares changing hands.

Anvil’s shares on the Toronto Stock Exchange traded up 4 apiece to $13.80, on a volume of 894,700.

In Toronto, the company has a 52-week trading range of $10.25- 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.