South African article

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    This report on AVL/DRC published today(14th) in South African mining paper 'Mining Weekly'. Cheers John.

    Will new copper-silver project show way in DRC?

    The Dikulushi project in the troubled Democratic Republic of Congo (DRC), being developed by an Australian-listed mining company, is the first greenfields mining and processing project to come on-stream in the country during the tenure of its young president, Joseph Kabila. While the project is not large, it is still viewed by some to be in the vanguard of a possible revival of mining in a country rich in resources. In fact, the vast country – which, at 2,3-million square kilometres, is about twice the size of South Africa – holds within in its borders a veritable treasure chest of natural-resource wealth, including world-class copper and cobalt deposits, diamonds, gold, zinc, manganese, water, timber and a host of other minerals, such as columbite-tantalite (coltan). However, over the years these riches have been as much a curse as a blessing, leading to, and sustaining, corruption and unrest – a fact that was once again highlighted by a United Nations Security Council report on how illegal exploitation of natural resources in DRC was fuelling the ongoing strife. But even during the war years, the Kabila administration was preparing the way for significant mining investment.

    Joseph, who took over from his father Laurent, who was assassinated in 2001, has been pursuing a range of economic reforms as well as mining-sector transformation. For instance, his administration has worked closely with the World Bank in drafting a world-class mining code, which is designed to ensure equity for international involvement in the industry.

    For its part, Anvil Mining has taken a giant leap of faith. Indeed, it started commissioning the first stage of its copper-silver project on September 16, and has continued to work on the project even when the peace process appeared somewhat fragile.

    In fact, the project commissioning came less than two months after the presidents of the DRC, Kabila, and Rwanda, Paul Kagame, signed a peace deal, intended to end the four-year war in DRC. "The signing of the peace agreement between the DRC and Rwanda brings the main parties in the conflict closer together and provides a great deal of optimism in the pursuit of lasting peace," says Anvil's executive director Bill Turner.

    "It is pleasing to see such significant political progress being made just before Anvil begins production at Dikulushi," he said at the time.

    In total Anvil holds exploration properties of about 43 000 km2 in the south-eastern part of the DRC, which are prospective for copper, precious and platinum-group metals. Its priority, however, is production from the Dikulushi deposit, regarded as one of the highest-grade undeveloped copper-silver deposits in the world. The new leadership of Kabila in early 2001 ushered in a commitment to finding a political rather than a military solution to restoring peace in the DRC, a willingness to move towards a more democratic form of government and a commitment to rebuilding the country's economy. These favourable changes in the DRC led to funding becoming available and encouraged Anvil to take the first step in developing the Dikulushi deposit, located in the Katanga Province in the south-east of the DRC.

    First-stage development, for which the capital cost is $5,7-million, comprises a low-cost openpit mining operation and heavy-media separation (HMS) processing plant. Mining contractor Con Roux has a 30 t excavator, five articulated dump-trucks and several other pieces of earthmoving equipment in operation. The openpit is down at seven metres depth, exposing the massive high-grade chalcocite at the top of the orebody. The topsoil from the first stage openpit has been removed and stockpiled for rehabilitation purposes.

    The erection of the 35 t/h HMS plant, which was constructed in Johannesburg by Metallurgical Design and Management, was completed at the end of July and all piping, mechanicals and electricals had been installed by the first week of August. A three-stage crushing circuit, comprising a jaw crusher and two cone crushers, was bought from major shareholder First Quantum Minerals, of Canada. It was brought to Ndola in Zambia where it underwent a complete refurbishment and is now installed on the Dikulushi site. A containerised assay laboratory has been established on site by SGS-Analabs, of Perth.

    Power to the site will be provided by four 375 kW Scania electrical power-generating units.

    "The HMS plant will treat ore at a rate of 250 000 t/y to produce 40 000 t/y of high-grade concentrates, which are expected to average about 40% copper and 1,100 g/t silver," says Turner. The concentrates will be sold to a metal trader and will undergo further treatment in Palabora Mining's copper smelter, 360 km north-east of Pretoria, and in Ongopolo's copper smelter at Tsumeb, in north Namibia. Shipment of concentrates from site is expected to begin this month.

    The relatively remote location of the Dikulushi project presents Anvil with several logistical challenges. Trucks will transport the concentrate on a 54 km upgraded road from the Dikulushi site to a docking facility at Kilwa, on Lake Moero. The Dikulushi concentrate barge, a self-propelled 48-m-long and 10-m-wide barge, will carry the concentrate across the lake to a docking facility at Nchelenge, in Zambia. "The operational performance of the concentrate barge, which was launched on June 14, is exceeding expectations," says Turner.

    "The barge, fully laden with 250 t of cargo, is achieving a speed of about 6,5 knots, making the trip from Nchelenge, in Zambia, to Kilwa in about four hours – about an hour-and-a-half less than anticipated," he says. The risk associated with the long supply chain from Zambia to South Africa and Namibia will be managed by outsourcing the transportation requirements to experienced logistics operators and trucking companies in the Whitehorse-Kasembo group.

    The concentrate handling and sampling procedures at the Ongopolo and Palabora smelters have been reviewed during site visits. Yearly metal production from stage one of the project will be about 14 000 t/y of cathode copper and 1,1 million ounces of silver. The forecast operating cost for copper cathode production is between US36 cents and US40 cents a pound (after silver credits), placing Dikulushi well within the lowest quartile of the world copper production cost curve.

    The commissioning of stage one of the project marks a significant milestone for Anvil and is the first step in developing the full potential of the Dikulushi project. Provided that the political risk profile continues to improve, Anvil expects to make a decision to proceed with the development of stage two – the addition of ball mill and flotation circuits before the end of the first year of commercial production from stage one.

    Stage two will be largely funded out of project cashflows and will produce a very-high-grade concentrate, expected to average 60% copper and 1,935 g/t silver. This is expected to reduce operating costs. Dikulushi has an independently audited measured, indicated and inferred resource (at a 2% Cu cut-off) of 1,94 million tons at an average grade of 8,58% copper and 266 g/t silver, 85% of which is in the measured and indicated categories. It is open at depth, with one of the deepest drill intersections being 16,7 m of 16% copper and 522 g/t silver at a vertical depth of only 165 m. Potential therefore exists to significantly increase resources and extend the mine life well beyond its current eight years. Anvil says it is sensitive to the need to undertake the development of mineral projects in developing-world environments in a socially responsible manner, which ensures a meaningful engagement of the local community, and the opportunity for local employees to develop and take on increasily challenging roles in the course of their employment. The company is undertaking social and infrastructure projects that will benefit the local community in the short term and during the life of the mining operation, and sustainable development projects that will bring longer term and self-sustaining benefits, that will continue well after the mining reserves are exhausted.

    Apart from the Dikulushi deposit, Anvil has exploration rights over the Kapulo deposits and a surrounding exploration area which totals 20 000 km2, and the Kalemie and Lungeshi tenements, which together total an additional 23 000 km2.

    The Kapulo prospect comprises three discrete high-grade copper deposits with a combined indicated resource of 1,1 million tons at 4,7% copper (down to about 50 m). The Kalemie tenements are prospective for gold, copper and platinum-group metals and cover an area of 18 500 km2 on the western side of Lake Tanganyika. The Lungeshi tenement covers an area of 4 900 km2 north of Tenke Fungurume, and is prospective for copper. The company says it plans to identify high-priority exploration targets in its 43 000 km2 of gold, base metal and platinum-group metal tenements in the DRC, by continuing to add value to these prospective tenements. The company says it will also diversify its risk profile by identifying further advanced exploration or development assets available for acquisition in other African countries. The DRC is the third-largest country in Africa and has long been recognised as one of the wealthiest countries in the world with regard to mineral potential. However, until recently, the investment climate has not been attractive enough to encourage investment from the international mining industry. In the latter half of 1997 and early 1998 there was a surge of interest by exploration and mining companies seeking opportunities for investment in the DRC. This enthusiasm was tempered by political unrest between mid 1998 and early 2001. It has been said that the gap between the current level of mineral production in the DRC and what the country is capable of producing is the biggest gap of any country in the world. In the early 1990s, the country was ranked number five in copper production, with yearly output of 500 000 t of copper. It ranked number one in terms of cobalt and diamond production. The gold potential of the country is virtually untouched.

    Because of its tremendous resource endowment, it is expected that the DRC will, in time, become one of the most favoured investment destinations for international mining and exploration companies.
 
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