Study has Tenke-Fungurume poised for production

Preliminary results from Tenke Mining’s (TNK-T) final feasibility study of the Tenke-Fungurume project in the Democratic Republic of Congo indicate that it will be among the world’s lowest-cost producers of copper and cobalt.

The Tenke and Fungurume deposits are situated about 175 km northwest of Lubumbashi. They occupy two concessions that cover an area of more than 1,437 sq. km and are estimated to host a combined 500 million tonnes grading 3.6% copper and 0.28% cobalt.

The net revenue per tonne of ore is expected to be US$95.50, assuming metal prices of US95cents per lb. copper and US$10 per lb. cobalt. Operating costs are estimated at US$31.50 per tonne, and total capital costs should ring in at US$455 million.

According to Tenke President Philip Wright, a cobalt price of US$8 per lb.

would result in production costs of US10cents per lb. copper after cobalt credits. “This cost becomes negative at US$10 per lb. for cobalt,” he noted.

The company hopes to have the deposit in production by December 2000. Initial production is pegged at 100,000 tonnes copper per year, expanding to 200,000 tonnes per year after the fourth year. The operation will produce roughly 5,000 tonnes of cobalt per year during the first four years and 12,000 tonnes per year thereafter.

The study indicates that 85 million tonnes of oxide ore at an acid-soluble grade of 3.19% copper and 0.25% cobalt will be processed during the first 15 years of the mine’s life.

The company has signed a long-term power supply agreement with the national utility. Hydroelectric power will be transmitted to an existing substation on one of the concessions.

Draft agreements have been reached on the sulphur supply, rail operation and secure port facility. Tenke is eyeing the South African ports of Durban and Richards Bay as staging facilities to ship its product to customers in Europe and North America.

Tenke has arranged a US$170-million debt facility with the Investec Bank of South Africa. The bank has appointed Micon International to review the project on behalf of the international banks involved in the project. Union Bank of Switzerland is advising Tenke with respect to equity.

Tenke opened a final data room on March 11. The company reports that a number of major companies have expressed interest in joining the project and are currently performing due diligence.

Tenke holds a 55% interest in the project and is operator. The remaining interest is held by state-owned mining company Gecamines.