Kansanshi feasibilty numbers wow they are good
FIRST QUANTUM MINERALS LTD ("FM-T;FQVLF-0")
- Results From GRDMinproc Definitive Feasibility Study
- On The Kansanshi Copper-Gold Deposit
(All figures expressed in United States dollars)
First Quantum Minerals Ltd. is pleased to announce the results of the
Definitive Feasibility Study ("DFS"), dated December 2002, for Phase One
development of First Quantum's 80% owned Kansanshi copper-gold project. The
Study was conducted and compiled by GRDMinproc Limited ("Minproc") of
Perth, Western Australia.
Economic Highlights
The following results have been estimated by Minproc on a 100% project
basis:
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Net Present Value Calculation, Phase One, Years 1-16 only
(before tax, 100% equity basis)
Capital Cost (owner mining, excluding power line) $ 163.4 million
Gold Price $ 330 per ounce
DFS Sensitivity Analysis
Copper Price (US$/lb) $0.72 $0.75 $0.80 $0.85 $0.90
discount rate of 10% $228 $277 $358 $439 $520
million million million million million
discount rate of 15% $135 $171 $230 $289 $348
million million million million million
discount rate of 20% $76 $103 $148 $193 $237
million million million million million
Internal Rate of Return 32.6% 36.8% 43.5% 50.0% 56.4%
Payback Period 4.2 2.8 2.3 2.0 1.8
years years years years years
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Philip Pascall, Chairman and CEO commented, "We are very pleased
with the outcome of the GRDMinproc Definitive Feasibility Study
which demonstrates the robust economics of the Kansanshi deposit.
The project will employ approximately 1,300 construction
personnel at its peak, with an operating workforce of
approximately 600, including all contractors to the project. The
development of Kansanshi will provide a long lasting benefit to
the city of Solwezi and the surrounding communities in the
Northwestern Province including an improvement to infrastructure
and services. The Kansanshi project will also act as a catalyst
for further private and public sector investment in the area. It
is our strategy to provide maximum benefit from the Kansanshi
project for existing shareholders by structuring a project
finance package that minimizes dilution without compromising
financial prudence. The project financing team that has been
established, including the Standard Bank Group, West LB AG and
the European Investment Bank, will ensure that the least dilutive
and most efficient financing structure will be put in place for
both the construction of Kansanshi and its operation after
commissioning. Subject to the approval of First Quantum's Board
of Directors, finalizing of the development framework with the
Government of the Republic of Zambia ("GRZ") and the completion
of favorable project financing, we expect to begin construction
in the second quarter of 2003 with commissioning and commercial
operation beginning in the fourth quarter of 2004. We are very
pleased with the support that we have received from President
Mwanawasa and we look forward to working with the GRZ in a joint
effort to expedite the construction of Kansanshi. First Quantum
Minerals is a committed long term investor in Zambia and we
believe that the development of new low cost copper deposits will
play an increasingly important role in the future of Zambia's
copper industry.".
Project Overview
The Kansanshi project will be developed in two phases of which
only Phase One is considered in detail in the DFS. Phase One
development (years 1-16) will focus on open pit mining and
processing of shallow oxide and mixed ores, although significant
quantities of primary sulphide ore will also be treated. Measured
and indicated mineral resources at a 0.5% copper cut-off total
302 million tonnes at 1.17% copper and 0.17 grams per tonne gold,
while Phase One proven and probable mining reserves are 142
million tonnes grading 1.43% copper and 0.22 grams per tonne
gold.
For the first three years of operation, 4.0 million tonnes per
year of oxide and mixed ore and 2.1 million tonnes per year of
sulphide ore will be mined from two deposits within the project
area. Ore treatment is flexible to allow for variations in ore
type, and includes conventional crushing, milling, flotation,
acid leaching and SX-EW to produce approximately 60,000 tonnes
per year of copper cathode and up to 70,000 tonnes per year of
copper in concentrates. As part of the Phase One development, the
comminution and flotation circuit will be expanded to handle an
additional 3.9 million tonnes per year of sulphide ore in year
three. As a consequence, concentrate production increases, while
SX-EW cathode copper is maintained at approximately 60,000 tonnes
per year until year eleven, before declining as weathered ore
types become depleted. Concentrates will be transported to a
smelter for further treatment, while the copper cathode will be
sold directly to metal dealers. By-product gold is recovered both
from a gravity circuit and from copper concentrates.
During the sixteen year, Phase One mine life, Kansanshi will
produce 1.6 million tonnes of copper, approximately 44% as copper
cathode and 66% as copper in concentrate. Owner mining cash costs
will average $0.36 per pound copper over the first 10 years of
production and $0.38 per pound of copper over the sixteen year
life of Phase One. Gold production will average 25,000 ounces of
gold per year.
The expectation is that there will be additional expansions
during the life of the operation. Phase Two development
(nominally years 17 to 28), will focus on sulphide ores, with the
possible construction of a roaster to enable SX-EW copper cathode
production to continue at the 60,000 tonne per year level.
The project will employ approximately 1,300 construction
personnel at its peak, with an operating workforce of
approximately 600, including all contractors to the project.
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Project Highlights
Key Data Phase One, Years 1-16 only
Mine Life - Phase One 16 years
Throughput:
Oxide and Mixed ores 4.0 million tonnes / year (max)
Fresh ores 2.1 - 6.0 million tonnes / year (range)
Ore Mined and Processed 143 million tonnes
Waste Mined 199 million tonnes
Head Grades
Copper 1.43 %
Gold 0.22 gram / tonne
Total Copper Cathode Production 722,812 tonnes
Total Copper Production in
Concentrate (paid) 912,525 tonnes
Total Gold Production in
Concentrate (paid) 395,479 ounces
Total Copper Recovery 80.0%
Cash Operating Costs after gold
credit (owner mining) $0.38 pound of copper
Cash Operating Costs after gold
credit (contract mining)* $0.43 pound of copper
* included for comparative purposes, if contract mining is utilized
initial capital costs for the project will fall to US $143 million.
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Capital Costs
Pre-production capital costs have been estimated at $163.4
million, comprised of $122.5 million in process plant and
infrastructure, $23.6 million in mining equipment, $6.5 million
in mine services, $5.7 million in pre-production mining and $5.1
million in owner's costs. Total sustaining and expansion capital
over the mine life of Phase One is approximately $118.3 million.
Minproc Resource and Reserve Calculation
The resources tabulated below have been estimated by Minproc in
accordance with National Instrument 43-101, Standards Disclosure
for Minerals Projects. Mr. Dan Greig and Ms. Annick Manfrino,
both employed by Minproc, are the qualified persons responsible
for the resource estimate in this release.
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Kansanshi Mineral Resource
Cut-off Class Tonnes Copper Copper Gold Gold
(Mt) (%) (Blbs) (g/t) (ozs)
Cu(t) 0.5% Measured 93.2 1.43 2.94 0.19 569,000
Indicated 208.6 1.06 4.87 0.16 1,073,000
Inferred 111.0 1.11 2.72 0.12 428,000
Total Measured +
Indicated 301.8 1.17 7.81 0.17 1,642,000
Cu(t) 1.0% Measured 48.4 2.09 2.23 0.25 389,000
Indicated 75.8 1.72 2.87 0.23 561,000
Inferred 41.2 1.81 1.64 0.14 186,000
Total Measured +
Indicated 124.2 1.86 5.10 0.24 950,000
Kansanshi Ore Reserve
Leach Ore Float Ore
Acid
Total Soluble Total
Ore Copper Copper Gold Ore Copper Gold
Classification (Mt) (%) (%) (g/t) (Mt) (%) (g/t)
Proven 30.9 2.28 1.73 0.28 39.6 1.02 0.17
Probable 16.0 2.21 1.78 0.31 56.0 1.04 0.20
Total Reserve 46.9 2.25 1.75 0.29 95.6 1.03 0.19
The proven and probable mineral reserve estimate is consistent with
Canadian (CIM) and Australian (JORC) reporting standards.
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Environmental Impact and Management
An Environmental Impact Statement (EIS) was prepared as part of
the DFS. The EIS addresses the construction, operation and
closure of the project and covers all identified significant
environmental issues.
Project Finance
Standard Bank Group and WestLB AG are "Co-Lead Arrangers and
Underwriters" for a limited recourse Export Credit and Commercial
debt loan facility of a minimum of US $120 million (Loan
Facility). It is intended that the loan facility be structured
50% as a commercial debt facility and 50% as an export credit
facility through the Export Credit Insurance Corporation of South
Africa. First Quantum is also in final discussions with the
European Investment Bank (EIB), the financing institution of the
European Union, who have expressed a strong interest in
participating in financing of the Kansanshi project. The EIB has
proposed several alternatives for their participation in
Kansanshi which may include providing tier one project financing
pari passu with the Lead Arrangers; subordinate debt and
quasi-equity project participation. Furthermore, First Quantum
has received expressions of interest from a number of
multi-lateral development banks, national development banks,
specialized equity funds and metal off takers who are willing to
provide funding, subordinated to the Loan Facility for the
development of the Kansanshi project.
"We are in the final stages of completing a financing package for
Kansanshi with the goal of drawdown and initiation of
construction in the second quarter. We have had overwhelming
interest and support from our lending syndicate. We expect to
deliver a project finance package that is structured to further
enhance the already exceptional economics of the Kansanshi
deposit" commented Martin Rowley, CFO.
Additional information on the Kansanshi project will be published
in the near term.
On Behalf of the Board of Directors
of First Quantum Minerals Ltd.
G. Clive Newall
President |
