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    Anvil looks to debt fund Dikulushi expansion

    Michael Quinn


    Friday, July 11, 2003
    ANVIL Mining says it is "very likely" that the US$4.5-5 million expansion of its Dikulushi copper-silver project in the Democratic Republic of Congo will be fully debt funded.

    Speaking at an investor briefing in Perth last night, Anvil managing director Bill Turner said financing was expected to be completed next month, leading to the increased production rates by March 2004.

    The expansion at Dikulushi will increase production of concentrate to 350,000t per annum from 250,000tpa, with the grade of the concentrate increasing from around 38% copper and 900gpt silver to 58% copper and 1800gpt silver.

    Cash costs are expected to drop below an average of US36 cents/lb over the five-year life of the opencut.

    Turner said the company was aiming to truck all of its concentrate to the Palabora smelter and refinery in South Africa. Currently, most of Dikulushi's concentrate goes 2500km to Tsumeb in Namibia.

    He also said the World Bank was considering providing political risk insurance, an outcome that would significantly increase the credibility of the project and its owner.

    Attention is already turning to the company's second project, possibly a 10,000tpa copper operation at Kapulo, 125km north of Dikulushi.

    Anvil will spend US$300,000 on 1500-2000m of drilling plus evaluation and scoping work and, all going to plan, the project could be in production by late 2004 or early 2005.

    Excess gear from Dikulushi including the dense media separation plant, a ball mill and power generation equipment is likely to be utilised at Kapulo, which Turner anticipates will be a low-cost development.

    Digitising of historical data from workings at Kapulo recently found in a museum in Brussels is underway. The prospect has a global resource of around 1 million tonnes grading 4.5% copper.

    According to Turner, Kapulo will likely have a high IRR, "somewhere north of 75%".

    In answer to a question regarding Anvil's share price, he alluded to the company's revenue - US$33 million per annum over the opencut life of Dikulushi - and an analysis of Anvil carried out by RFC Capital earlier this year.

    RFC analyst Keith Williams calculated a NAV of 25 cents per share for Anvil, though Turner said the value of $5 million for Kapulo was "a very nominal number".

    He said dividends equivalent to 2-3% of the company's share price would likely be looked at late next year after debt for the expansion at Dikulushi was reduced.

    And he said the "jury was still out" on listing the company on London's AIM board or the Toronto Stock Exchange, and that he believed there was "quite a lot of buying power" from investors in Germany and Luxenboug via ANZ Nominees.

 
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