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Gold/Mining/Energy : first quantum minerals FM on TSE -- Ignore unavailable to you. Want to Upgrade?

To: joseph schevenels who wrote (271)	12/21/1999 10:45:00 AM
From: keith schaefer	Read Replies (1) \| Respond to of 385

First Quantum Awarded interests in Zambian Copper Belt. > >First Quantum (FM.CDNX) and partner Glencore International AG have won a >bidding process to acquire the Nkana mining and concentrator assets and the >Mufulira mine, concentrator, smelting and refining operations in the >copperbelt of Zambia. Zambia's copperbelt hosts some of the world's richest >copper-cobalt deposits, but the mines have been in steady decline since the >1970s and desperately require foreign investment. Copper accounts for most >of Zambia's hard currency earnings and mining is a major employer in this >country of 10 million people. But output has dropped to about 250,000 >tonnes annually from a peak of over 700,000 tonnes in the early 1970s. The >consortium of First Quantum and Glencore will now enter into negotiations >to fix terms on which to acquire these assets, subject to approvals by the >Zambia Consolidated Copper Mines board and government approvals. > >Although terms of the acquisition were not disclosed, it is expected to be >similar to a recent acquisition by Anlgo American. Anglo will take an 80 >percent interest in the Konkola, Nchanga and Nampundwe mines owned by >Zambia Consolidated Copper Mines through a new company, Konkola Copper >Mines Plc. > >Glencore is a commodity trader (private) with large interests in laterite >nickel projects. Glencore's involvement is viewed largely as financial >backing to First Quantum. First Quantum has proven to be an efficient mine >operator of smaller assets (Connemara and Bwana Mkubwa mines). Connemara is >a gold operation in Zimbabwe and Bwana Mkubwa is a very successful copper >leach operation from tailings in Zambia. Bwana Mkubwa also has a stand >alone acid plant which has proven to be very profitable; the cost per pound >of copper is $0.35 and net of acid production it is ($.02). Historically >the company has suffered from a lack of working capital. It has recently >made great progress in paying down debt. > >Nkana resources are currently 200 million tonnes grading 2% copper with >annual production of 60,000 tonnes Cu/year. Mufulira resources stand at >some 86 million tonnes grading 3% copper with similar production as Nkana. >The bulk of production comes from underground. > > >COMMENTS >These latest acquisitions are clearly significant and will elevate FM into >the intermediate producer category with longer-term reserves. The two >operations under its control have been considered successful, but do not >have long life resources. One concern we have would be any requirement to >assume any of the debt of the new acquisitions. Another concern we have >will be ability to modernize the operations - if the government imposes >restrictions on the number of employees and the social requirements to >maintain a larger than necessary workforce, the economic benefit to FM will >be reduced. However, despite the non-disclosure of any terms at this time, >we view this a significant transaction for FM. Happy Holidays Geoff Chater First Quantum Minerals Ltd. email geoff@first-quantum.com T. 604-688-6577 F. 604-688-3818