Wednesday Jun 17 1998
For the period ended March 31, 1998, progress continued on Tenke's bankable feasibility study during the second quarter period. Base case studies and
financial models were completed and a process of verification and optimization of all aspects of the feasibility study started. Preliminary data from the
feasibility study indicate Tenke will be among the world's lowest cost producers of copper and cobalt and will be one of the largest. Estimates of copper
cost production are 10 cents (U.S.) per pound after cobalt credits based on a price of $8.00 (U.S.) per pound for cobalt. This cost becomes negative at
$10.00 (U.S.) per pound for cobalt. Capital costs are estimated to be $455-million (U.S.) including owners costs, pre-production and contingency.
Preliminary production plans schedule 85 million tonnes of oxide ore at an average acid-soluble grade of 3.19 per cent copper and 0.25 per cent cobalt to be
processed during the first 15 years. Initial production is planned at 100,000 tonnes per year of copper with expansion likely to 200,000 tonnes per year
after the fifth year of operation. Cobalt capacity will be expanded to match sales contracts with approximately 5,000 tonnes per year planned in the first
four years and 12,000 tonnes per year thereafter.
A range of ports is available for product shipment and incoming supplies. South Africa presently offers the best facilities and Durban is on a direct rail route
from site. Metal will be shipped out to customers in North America, Asia and Europe. Early in the quarter, a geological and mining data room was opened in
support of the company's financing program. Financing will be a blend of debt and equity and the company expects to finalize its financing strategy by the
end of June 1998. Investec Bank Ltd. of South Africa which is arranging a procurement debt facility of $200-million (U.S.), appointed Micon International
as independent engineer. Micon is presentdy reviewing the project and the feasibility study on behalf of the international banks expected to form the
project's banking consortium. In relation to the project's equity financing, a number of senior companies have expressed an interest in participating in the
development of the Tenke Fungurume concessions and are currently in active due diligence. A final data room containing metallurgy, engineering, cash
flow and costing data was opened in mid-March in support of this. Tenke intends to implement the project on a fixed price lump sum basis and tenders
were called from a shortlist of the world's best contracting firms for the engineering, procurement and construction of the Tenke Fungurume project. The
contract will be awarded following completion of financing arrangements. Currently, the company is engaged in the incorporation of all data received from
last year's successful exploration program into the final feasibility study. The exploration program had resulted in 197 million tonnes of new drill-indicated
resources at a grade of 4.37 per cent copper and 0.22 per cent cobalt bringing the total resource estimates to 520 million tonnes at 3.5 per cent copper and
0.28 per cent cobalt. This resource contains 42 billion pounds of copper and 3.3 billion pounds of cobalt. Recently, Tenke was instrumental in the
formation of an official Chamber of Mines in the Democratic Republic of the Congo. The founder members include a number of well-known senior mining
companies. The chamber will assist the development industry in the DRC and hopes to provide sound advice to the new government on industry issues.
The chamber's first AGM will be held in the next few months in order to set a budget and business plan and will be attended by Philip J. Wright,
vice-president of the chamber.
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