ENRC, which has been diversifying into Africa, said it was confident about the legal title for the Kolwezi tailings operation, even though First Quantum was continuing international arbitration proceedings in an effort to get it back.
‘We have gone through quite a substantial due diligence process, and not only management but also our board understands the basis where the licence came from,’ ENRC Chief Executive Felex Vulis told a conference call.
‘It was withdrawn by the Congolese government, and the court of appeal has confirmed that the withdrawal was lawful.’
Democratic Republic of Congo shut First Quantum’s $750 million KMT copper project at Kolwezi last September, after a review flagged contract irregularities and production delays at the site.
A court-appointed liquidator has taken over Kolwezi temporarily after the Congo mines minister handed the Kolwezi licence to Highwinds Properties, controlled by Israeli resources investor Dan Gertler.
‘We ... find it odd that (Vulis) indicated in the conference call that there was no legal action ongoing when there is a very highly publicised international arbitration ongoing,’ Clive Newall, president of First Quantum, told Reuters.
‘We are considering the statement by ENRC and evaluating our options.’
Under the ENRC deal, London-listed ENRC bought 50.5 percent of Camrose Resources Ltd — controlled by Gertler — for $50 million in cash and $125 million of promissory notes.
Camrose controls five copper and cobalt exploitation licences, including for Kolwezi, but does not own the infrastructure at the project left by First Quantum.
ENRC became familiar with Gertler after its $955 million takeover last year of Central African Mining and Exploration Co (CAMEC), which was 35 percent owned by him.
The CAMEC deal was ENRC’s first entry into Africa, which gave it both geographic diversification and an entry into metals such as copper, cobalt and platinum.
The new set of assets are all close to the copper and cobalt mines it bought through the CAMEC acquisition, Vulis added. ‘We see a lot of synergy, we see a lot of potentiality with these assets.’
Under the deal, ENRC will form a joint venture with Gertler-controlled companies, with ENRC in charge of operating the copper and cobalt mines.
The Congo government, which has bitterly denounced First Quantum’s campaign to retrieve the licences, immediately put out a statement welcoming the ENRC deal.
‘The DRC welcomes investors who share the government’s commitment to a level playing field and who are prepared to work within the Mining Code and to live up to their contractual obligations,’ mining minister Martin Kabwelulu said.
In June, the World Bank postponed a decision on writing off Congo’s debt at Canada’s request because of the First Quantum legal dispute.
The combined assets held by Camrose, apart from Kolwezi, have reserves of 7.8 million tonnes, with grades of 2.37 percent copper and 0.69 percent cobalt, ENRC said.
Those assets are expected to support production of 45,000 tonnes of contained copper and 6,000 tonnes of contained cobalt per year, ENRC said.
This will be on top of ENRC’s existing plans to produce 130,000 tonnes of copper cathode a year and 12,000 tonnes of contained cobalt from the CAMEC assets by 2012.
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