Falconbridge gains foothold in Zambian copper belt

A consortium consisting of Falconbridge (FL-T) and South African giants Gencor and Anglo American has gained the exclusive right to conduct a feasibility study on the Konkola copper project in north-central Zambia.

The deal stems from a memorandum of understanding signed by the consortium, the Zambian government and Zambia Consolidated Copper Mines (ZCCM).

The project consists of the Konkola copper mine and concentrator, situated southwest of the town of Mufulira, and a copper smelter and refinery in the town itself. (The Mufulira copper mine and concentrator are not included in the arrangement.)

The Konkola mine is operating below its potential, having produced 42,000 tonnes in 1996 (no grades available). Shafts already extend to depths of more than 900 metres.

Also in operation are the smelter and refinery at Mufulira. The only data available for the former dates from 1994, when 139,000 tonnes of blister copper were processed from material derived from several Zambian mines.

Resources at Konkola are estimated at 340 million tonnes grading 3.8% copper.

It is estimated these will provide 180,000 tonnes of finished copper annually over a mine life

of at least 30 years. An associated cobalt resource is estimated at 0.07%.

Copper mineralization in the deepest portions of the Konkola deposit is well-delineated, and the consortium envisions mining at a depth of 1,740 metres. Capital costs could run as high as US$800 million, including expenditures on mining equipment and processing facilities.

It has not yet been decided which of the three companies would act as operator if a production decision is made. The feasibility study will be managed by all three.

Due diligence should be completed by mid-1997, and the feasibility by year-end. The latter is expected to cost US$10-12 million, to be financed by the consortium.

Falconbridge and Gencor each have a 30% interest in the consortium, with the remainder held by Anglo-American’s subsidiary, Zambia Copper Investments.

The group will be seeking an 80% stake in the new company that will own the assets and operations of the Konkola division and the Mufulira smelter and refinery. The agreement allows ZCCM to retain a 5% free and 15% repayable, carried interest in the new company.

ZCCM is 60.3%-owned by the Zambian government and 27.3%-owned by Anglo American, and is being privatized in stages. The first sale, an 80% interest in the Kansanshi copper mine division, was made to Cyprus Amax (CYM-N) last month for US$28 million.