- Published: 21 January 2009
- Written by Editor
Anvil Reaches Agreement with Gécamines and the DRC Government for the Kinsevere and the Dikulushi Properties
All amounts are expressed in US dollars, unless otherwise stated.
Anvil Mining Limited (TSX, ASX: AVM), ("Anvil" or the "Company"), today announced that it had reached agreement with La Générale des Carrières et des Mines ("Gécamines") and the Government of the Democratic Republic of Congo ("DRC") on the terms of its Kinsevere "Contrat d'Amodiation" (Lease Agreement) and the Dikulushi Mining Convention.
The Company is in possession of an amendment agreement for the Kinsevere Lease Agreement, which has been signed by Anvil and Gécamines. In addition, the Company has been formally notified by Gécamines and the DRC Government that the Dikulushi Mining Convention (the "Convention") remains unchanged.
Bill Turner, President and Chief Executive Officer of Anvil, commented, "We are satisfied with the outcome and believe that the amended agreement for Kinsevere and terms therein provide a solid base from which to further develop this project and to move forward with our partner Gécamines. Importantly, finalization of the agreement enables us to proceed with funding for the Stage II expansion of our flagship project at Kinsevere; a significant, high-grade copper resource with potential to increase in size."
"Paul Fortin, Managing Director of Gécamines commented, "We are pleased to have been able to reach a satisfactory outcome with Anvil with respect to the Mining Review and this should now clear the way for Anvil to proceed with its Stage II development of Kinsevere. Anvil has been one of the pioneers in the DRC Copperbelt and we are keen to see our projects develop to their full potential with the help of this company."
Kinsevere Lease Agreement
The Kinsevere mine is located in the Katanga Province in the south-east of the DRC, approximately 30 kilometres north of the provincial capital, Lubumbashi. The mineral rights to Kinsevere are held by Gécamines. AMCK Mining SPRL ("AMCK"), a special purpose joint venture company between Anvil (95%) and Mining Company Katanga SPRL (5%), a local, privately owned Congolese company, have a Lease Agreement with Gécamines to mine and process ore from the Kinsevere mine until 2024 followed by an automatic 15 year extension. The Company's 95% interest in the Kinsevere Lease Agreement has not been amended.
The key details of the amended Lease Agreement are set out below in
Table 1.
Table 1. Key amendments to the Kinsevere Lease Agreement
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Term Original Agreement Amended Agreement
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Rent payments Rent paid to Gécamines Rent paid to Gécamines
on a sliding scale, from based on 2.5% of gross
a floor price of $35 per turnover.
tonne of copper at a LME
copper price of $2,200 per
tonne (or $1.00/lb copper)
to a ceiling price of
$70 per tonne of copper at
an LME copper price of
$4,000 per tonne (or
$1.80/lb copper) on each
tonne of commercially
viable copper metal
extracted at Kinsevere.
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Cash payments A "pas de porte" (entry An additional "pas de
premium) payment of porte" (entry premium)
$5 million of which payment of $15 million
$1 million was paid in is to be made, of which
December 2005 and $10 million is to be
$4 million was paid in paid within six months
January 2007. of the amended agreement
coming into effect and
the balance within
12 months.(1)
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Advisory committee Nil. An Advisory Committee,
comprised of three
members from Gécamines
and three from AMCK,
will be responsible for
following the progress
of the Kinsevere mine.
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AMCK management Nil. Gécamines to have one
member in the management
of AMCK to fill such
position as may be
determined by AMCK.
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Social development Nil. AMCK will continue the
implementation of
economic and social
development programs for
the benefit of the
communities surrounding
the Kinsevere mine.
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Employment Nil. AMCK has agreed to
provide former Gécamines
employees priority
opportunities for
employment provided they
possess equivalent
qualifications and
capabilities.
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Provision of Nil. AMCK has agreed to
services and provide Gécamines with
materials a preferential
opportunity to supply
AMCK with services
and materials on
commercially competitive
terms.
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(1). In the event that Anvil arranges financing of $125 million or more,
the timing of payments will be revised such that $10 million shall
be paid within 14 days of the receipt of funds of such financing and
$5 million paid within six months of the date of payment of the
$10 million.
Dikulushi Mining Convention
The Company has concluded discussions with Gécamines and the DRC Government regarding the Convention and the terms and conditions of the Convention have not changed. Under the Convention, which was signed by the DRC Minister of Mines, Minister of Finance and Minister of Plan & National Reconstruction on January 31, 1998, and ratified by Presidential Decree No. 60 on February 27, 1998, Anvil, through its 90% owned subsidiary Anvil Mining Congo SARL is guaranteed sole and exclusive rights for exploitation of the area governed by the Convention, for a minimum period of 20 years from the date of the issue of the tenure. The remaining 10% of the equity in the Dikulushi mine is held in trust by the Company for the economic, social and infrastructure development of the Dikulushi region.
Since commencement of operations in 2004, the Company has invested approximately $18 million in various social programs and infrastructure developments in the Dikulushi region.
While the terms and conditions of the Convention have remained unchanged, Anvil has agreed to revise the trust structure under which the surrounding communities' interests in the Dikulushi mine are held, in order to provide for more direct involvement of DRC authorities and the local communities, in the implementation of social and economic development programs.
Bill Turner further commented, "Dikulushi was the Company's first mine in the DRC. Negotiation of the Dikulushi Mining Convention and development of the Dikulushi mine were undertaken during an especially difficult period in the DRC's history and we are pleased that the DRC Government has upheld the terms and conditions of the Convention."
Mutoshi Joint Venture Agreement
Discussions with Gécamines to complete an amended Mutoshi Joint Venture Agreement continue to progress, using as a basis, the commercial terms agreed with Gécamines and the DRC Government in October 2008. The Company is confident that a satisfactory agreement can be reached with its joint venture partner Gécamines.
Anvil Mining Limited is an unhedged copper and silver producer whose shares are listed for trading on the Toronto Stock Exchange (as common shares) and the Australian Securities Exchange (as CDIs) under the symbol AVM.
Caution Regarding Forward Looking Statements: The forward-looking statements made in this news release are based on management's assumptions and judgments regarding future events and results. Such forward-looking statements, including but not limited to those with respect to the Company's plans for expansion of the Kinsevere copper mine involve known and unknown risks, uncertainties and other factors which may cause the Company's actual results, performance or achievements to be materially different from any anticipated future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the actual market prices of copper, changes in project parameters as plans continue to be evaluated, and the possibility of cost overruns, as well as those factors disclosed in the Company's filed documents. There can be no assurance that the Stage II expansion of the Kinsevere copper mine will proceed as planned or be successfully completed within expected time limits and budgets or that, when completed, the expanded facility will operate as anticipated. In addition, no assurance can be given as to the outcome of any discussions and negotiations with Gécamines and the DRC Government regarding the Company's Mutoshi property or that Anvil's security of tenure and its ability to secure additional financing in the future may not be adversely affected so as to have a material adverse effect on its business, operating results and financial position.
Contacts
Craig Munro
Senior Vice President Corporate & CFO
+61 (8) 9481 4700
This email address is being protected from spambots. You need JavaScript enabled to view it. (Perth)
Robert La Vallière
Vice President Corporate Affairs
(Office) (514) 448-6664
(Cell) (514) 944-9036
This email address is being protected from spambots. You need JavaScript enabled to view it. (Montréal)
