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Gold/Mining/Energy : Copper - analysis -- Ignore unavailable to you. Want to Upgrade?

To: Stephen O who wrote (309)	5/17/2001 1:44:42 PM
From: Stephen O	Read Replies (1) \| Respond to of 2131

First Quantum Minerals Ltd. (TSE Symbol "FM", LSE Symbol "FQM") is pleased to announce the signing of a Letter Of Intent ("LOI") with Phelps Dodge Corporation ("Phelps Dodge"), (NYSE Symbol "PD") for the acquisition of Phelps Dodge's 80% interest in the Kansanshi Copper-Gold Deposit ("Kansanshi") located in Zambia. The Kansanshi Copper-Gold deposit hosts an open pit mineral resource of 267 million tonnes grading 1.28% copper and 0.16 gram per tonne gold containing 3.4 million tonnes (7.5 billion pounds) of copper and 1.4 million ounces of gold. Zambian Consolidated Copper Mines ("ZCCM") holds the remaining 20% in Kansanshi. Under the terms of the LOI, First Quantum will acquire 100% of Cyprus Amax Kansanshi Holdings Limited ("Cyprus Amax"), a wholly owned subsidiary of Phelps Dodge. In consideration, First Quantum will pay US$2.5 million and 1.4 million common shares upon execution of a Definitive Agreement by June 29, 2001 ("First Closing"). In addition, thirty days after the commencement of commercial production at Kansanshi, First Quantum will pay Phelps Dodge an additional US$25 million less an amount equal to the market value at that time of the 1.4 million First Quantum common shares ("Second Closing"). First Quantum will use its best efforts to complete a bankable feasibility study within twelve (12) months from the First Closing, and subject to this study demonstrating the Kansanshi project to be bankable, will use its best efforts to commence commercial production within thirty (30) months of completion and adoption of the feasibility study. Closing the final definitive agreement with Phelps Dodge is conditional upon First Quantum agreeing on terms for the continued operation of the underlying agreements with the Government of Zambia and ZCCM, as well as, Phelps Dodge obtaining approval to the transaction from the Government of Zambia and ZCCM. Closing is also subject to all necessary regulatory approvals and the approval of the Board Of Directors of First Quantum Minerals Ltd. and the senior management of Phelps Dodge Corporation. "The Kansanshi copper deposit offers First Quantum the opportunity to expand its asset base in Zambia. In developing Kansanshi, we intend to use our local expertise and exploit our existing Copperbelt operations and associated infrastructure. First Quantum is committed to playing an important role in the renaissance of the Zambian Copperbelt. Our interest in the development of the Kansanshi copper deposit is a natural outcome of the Government of the Republic of Zambia's initiative of supporting investment in the mining industry" commented Philip Pascall, Chairman & CEO. History The Kansanshi project is located in the Northwestern Province of Zambia, approximately 15 kilometres north of the town of Solwezi and 16 kilometres south of the Democratic Republic of Congo border. The Copperbelt town of Chingola is approximately 180 kilometres to the southeast. Kansanshi is one of the oldest known mines in Zambia, with evidence of direct copper smelting dating back to the 4th Century. Since the rediscovery of these ancient workings in 1899, the Kansanshi deposit has been intermittently mined for the recovery of high grade copper from both underground and open pit. The total production from the Kansanshi deposit to date is approximately 80,000 tonnes. In January 1997, as part of the privatization of Zambian Consolidated Copper Mines ("ZCCM"), Cyprus Amax Minerals Company ("Cyprus Amax") entered into an agreement with ZCCM and the Government of the Republic of Zambia ("GRZ") to secure majority ownership of the Kansanshi project. This agreement was finalized on March 14,1997. Cyprus Amax, which was acquired by Phelps Dodge in 1999, completed over 80,000 metres of drilling and produced a preliminary feasibility study in April 2000. Geology The Kansanshi deposit occurs within the Lufilian arc, a major tectonic province characterized by broadly north-directed fold and thrust structures, which hosts the world class Central African Copperbelt . The property geology is dominated by the northwest-trending Kansanshi Antiform, which exposes rocks of the Late Proterozoic Kansanshi Mine Formation in the core of a major refolded fold. Copper mineralization occurs both in steeply dipping, generally north-south trending quartz-carbonate veins and as essentially flat lying, bedding controlled stratabound mineralization, within altered phyllitic rocks of the Mine Formation. The deposit has been defined in two areas, the Main Zone and the Northwest Zone. Supergene enrichment and subsequent oxidation of the original sulphide mineralization has produced oxide, mixed and hypogene ore types. Resources A computer based block model of the Kansanshi deposit was developed by Independent Mining Consultants, Inc. ("IMC") for Phelps Dodge to support the development of a preliminary feasibility mine plan. The model incorporated all geologic, assay, metallurgical, and geotechnical data available as of March, 2000. The resource estimate is based on a total of 381 Cyprus Amax and 112 ZCCM diamond drill holes for a total of 493 diamond drill holes comprising 100,900 meters of drilling. Mine plans by IMC produced an open pit mineral resource of 267 million tonnes grading 1.28% total copper containing 3.4 million tonnes (7.5 billion pounds) of contained copper. Approximately 80% of this resource is currently in the measured and indicated category. Associated with this resource is inferred category gold mineralization averaging 0.16 gram per tonne. The gold mineralization is inferred category because only 25% of the sample intervals in the various drill campaigns were assayed for gold. On Behalf of the Board of Directors 12g3-2b-82-4461 of First Quantum Minerals Ltd. Listed in Standard and Poor's "G. Clive Newall" Sedar Profile #00006237 G. Clive Newall For further information visit our web site at www.first-quantum.com or contact Geoff Chater or Bill Iversen Suite 450-800 West Pender Street, Vancouver, British Columbia, Canada V6C 2V6 Tel: (604) 688-6577 Fax: (604) 688-3818 Toll Free: 1 (888) 688-6577 E-Mail: info@first-quantum.com