DRC approves development of Tenke Fungurume

Vancouver The government of the Democratic Republic of Congo (DRC) has formally approved amended agreements governing development of the Tenke Fungurume copper-cobalt project in the world-famous Katanga copper belt. The project will be developed by operator Phelps Dodge (PD-N), which has rights to an effective 57.75% interest.

Vancouver-based Tenke Mining (TNK-T) holds an effective 24.75% interest in the deposit and surrounding 1,500-sq.-km land package, with the remainder held by state-owned mining company, Gecamines. Tenke holds its interest through subsidiary Lundin Holdings. Phelps Dodge is now the controlling shareholder of Lundin Holdings.

Tenke Fungurume is considered the largest and highest-grade undeveloped copper-cobalt deposit in the world, with inferred resources of 547 million tonnes grading 3.5% copper and 0.27% cobalt. Potential to expand known resources through ongoing exploration is considered good as mineralization is hosted in sequence of sedimentary host rocks with a cumulative strike length of more than 82 km.

Phelps Dodge and its partners have proposed a staged development plan for the project, starting at a production rate of at least 40,000 tonnes per year of copper and associated cobalt. By year five, annual production is projected to increase to 130,000 tonnes (copper and associated cobalt), with a further increase to 400,000 tonnes by year 11 of operations.

In addition to government approval, the partnership agreements for development of the project were approved by Gecamines and ratified by Presidential Decree. As a result, the condition of force majeure was lifted from the project. This paves the way for Gecamines to receive asset transfer payments totaling US$50 million at staged milestones over five years.

Phelps Dodge has mobilized crews to the site to begin community consultation and social development programs for nearby communities. Tenke President Paul Conibear states that the project will be a major employer in the Katanga region, “and will bring significant annual tax revenue to the government, along with infrastructure rebuilding and important social programs for the region.”

Engineering contractors are updating previous feasibility studies and expect to produce a final study by mid-2006. Construction would follow with the goal of starting first copper production in early 2008.