Cons. Eurocan moves on Zairian feasibility study

Tenge Fungurume, a copper-cobalt project in Zaire, will undergo a $15-million feasibility study.

The project is currently owned by Tenge Fungurume Mining, a Zairian company owned 45% by state-owned mining company Gecamines and 55% by a subsidiary of Consolidated Eurocan Ventures (KEU-T).

For the interest, Vancouver-based Eurocan made a partial payment of $70 million to Gecamines earlier this month.

Eurocan recently raised $120 million through a private placement to acquire and develop Tenge Fungurume. A balance of $44 million remains in escrow, and is expected to be released to Eurocan shortly.

The company will advance funds to Tenge Fungurume Mining to complete a feasibility study on the project. Those funds are considered advances under the terms of the agreement, and will be repaid with production proceeds.

The study, to be completed within two years, must demonstrate the feasibility of a project turning out 80,000 tonnes per year of copper metal. Capital costs are estimated at $350 million.

Eurocan will then have 120 days to deliver a production decision, requiring the company to pay Gecamines an additional US$40 million. It will also have 12 months to arrange necessary financing, and an additional six months to start construction. Eurocan’s subsidiary will be required to pay Gecamines another US$160 million within 72 months of the agreement.

The Tenge and Fungurume concessions are situated about 175 km northwest of Lubumbashi. Geological resources at the concessions are estimated at 220 million tonnes of 4.42% copper and 0.33% cobalt, using a 1% copper-equivalent cutoff. The global resource potential is estimated at 1 billion tonnes at similar grades.

Eurocan expects to complete a full feasibility study in 16 months, and begin production within four years at an initial rate of 100,000 tonnes of copper and 8,000 tonnes of cobalt per year. Expansion phases will increase production to 400,000 tonnes of copper per year by 2008.

Elsewhere in Zaire, Trillion Resources (TLQ-T) recently signed a preliminary agreement with Gecamines for an exploration joint venture in the country’s copper belt.

Trillion will have the right to earn a 55% interest in the 2,806-sq.-km property. Exploration there is aimed at outlining copper, cobalt, gold, uranium and other mineral deposits.

Melkior Resources (MKR-M) has agreed to finance $2-million worth of exploration there though Trillion will retain the right to participate in any exploitation activities.