Eurasian Natural Resources Corp. will pay the Democratic Republic of Congo $101.5 million for the mining license at its Frontier site, purchased this year as part of an acquisition of assets from First Quantum Minerals Ltd.
ENRC, which bought First Quantum assets in Congo including its share of the Kolwezi and Lonshi projects for $1.25 billion, plans to begin annual output of as much as 92,000 metric tons of copper concentrate at Frontier in 9 to 12 months, said Chief Executive Officer Felix Vulis in a phone interview today.
“The historical maximum capacity of this plant was 92,000 tons of copper concentrate,” Vulis said. “It’s about that amount we are keen to produce.” The company plans to refine the concentrate from Frontier at its Chambishi smelter in Zambia, about 70 kilometers (44 miles) away from the mine, he said.
The license will be issued in coming weeks, ENRC said.
“We see this as a positive step in allowing ENRC to commence operations,” Jason Fairclough, a Bank of America Corp. analyst, said in a note. “We estimate a Net Present Value for this mine of $1.6 billion, which is not included in our base case NPV.”
ENRC, a producer of ferroalloys, iron ore, aluminum and power in Kazakhstan, also owns copper and cobalt producers Central African Mining & Exploration Co. in Congo and Chambishi Metals Plc in Zambia.
ENRC bought the license when it was released by the prior owners in a deal with the Congo government, Vulis said. “We are working with the DRC government only,” he said. First Quantum lost the license to operate Frontier and nearby Lonshi in May 2010 when Congo’s Supreme Court said it obtained the rights to the concessions illegally. State-owned Sodimico then sold them to three offshore companies for a total of $60 million.
The joint venture owned by the offshore companies that controlled the Frontier license agreed to return part of their concession to the government, said Valery Mukasa, the chief of staff for Congo’s Mines Minister Martin Kabwelulu.
Congo then offered the stake to ENRC, Mukasa said by mobile phone message in response to questions, without elaborating or saying whether the offshore companies were compensated.
Frontier was Congo’s largest taxpayer in 2009, contributing $55 million to the state Treasury, First Quantum filings show.