There is a great deal of doom mongering and conspiracy theory editorial these days about the mining industry of the DRC and the renegotiation of contracts. What a lot of commentators are doing is to prejudge the outcome of the commission set up to review 60 mining agreements entered into by the para-statal companies of the DRC Government. Anyone with any knowledge of the history of the DRC, which only four years ago Tim Butcher (Blood River: A Journey to Africa’s Broken Heart – see www.bloodriver.co.uk) pretty accurately described as an “undeveloping country”, should consider the difficulties involved here.
Give them a chance to get it right themselves. Have some consideration for a country that was pillaged by King Leopold of the Belgians from the late 19th Century (and may have been responsible for the deaths of some 3 million Congolese) and has seen almost continual conflict or Mobutu’s kleptocracy since independence in 1960. It is vital that it is got right this time, and let us allow them some leeway. Mistakes will be made, but hopefully they will no longer be the genocidal mistakes of the past and the great potential of this country can start to be revealed and achieved.
Butcher makes a very interesting point. When he followed Stanley’s route along the Congo from Lake Tanganyika to the Atlantic as recently as 2004, he found old people in many places who remembered cars and the other 1960s technology trappings of today. The young people, however, had no knowledge of such things. Where else in the world are the old more up with technology than the young? It was truly an ‘undeveloping country’.
Meanwhile today’s business continues. Katanga Mining reports that KFL Ltd (which is 100% owned by Katanga), Gécamines and Kamoto Copper Co (KCC) have signed an agreement that sets out compensation, security and payment in exchange for the release to Gécamines of the portion of the KCC concession that represents the Mashamba West and Dikuluwe deposits. These deposits were not scheduled to start producing oxide ores until 2020 and 2023 respectively. KCC is a joint venture between Gécamines, a Democratic Republic of Congo state-owned mining company, and KFL. The agreement provides for Gécamines to replace these deposits by July 1, 2015 with other deposits having a total tonnage of 3,992,185 t of copper and 205,629 t of cobalt according to international and TSX standards, or pay over time, beginning July 1, 2012, a total of $825 million from Gécamines royalties and dividends in KCC. The parties have agreed to fix the equivalent value of the deposits released by reference to the 2006 feasibility study. The agreement set this amount at $825 million, subject to a joint review by the parties.
At July 1, 2012, the parties will calculate the proportion of the reserves replaced by Gécamines at that date. Dividends and royalties payable to Gécamines by KCC from this date will be paid into an escrow account to secure future payments by Gécamines. As at July 1, 2015, the parties shall recalculate the amount of reserves transferred to KCC. In the event Gécamines has not completely replaced the deposits, the balance of the amount due shall be paid in cash. Any cash thus remaining due shall be paid to KCC using the funds in the escrow account, and any remaining payments due will be met from Gécamines future revenues from KCC, until full payment has been made.
To assist Gécamines in finding replacement deposits, KCC and Gécamines shall conduct jointly managed exploration to be funded initially by KCC and reimbursed by Gécamines out of its revenues from KCC.
In addition to the agreement reached with Gécamines above, the parties agreed to complete a definitive agreement within the next 90 days addressing transfer of the exploitation permits and mining rights over an agreed area, to encompass the approximate current concession area, from Gécamines to KCC.
In exchange for this transfer, which will result in KCC holding the assets directly, KCC will pay to Gécamines as compensation $35/t of remaining copper reserves identified in the feasibility study. This sum, which is approximately $135 million, will be paid over time on a basis to be agreed in the definitive agreement and will be based on the cashflows available to KCC. The agreement will also address various other matters relating to the joint venture, including the management of the exploration programme.
Moto Goldmines reports a 47% increase in Indicated mineral resources at the Moto gold project, which is a joint venture between Moto and L’Office des Mines d’Or de Kilo-Moto (OKIMO). The increase in demonstrates the robustness of previous mineral resource estimates and further adds to the project’s fundamentals, long life and significant potential. The agreement with Katanga also demonstrates “robustness”. Is it any wonder the country thinks it should get a little more for its riches, while acknowledging that these mining companies have the potential to bring jobs and community development to the country. It is to be hoped that many companies will follow the route pioneered by Banro with its Banro Foundation.
Moto’s revised resource estimate was independently undertaken by Cube Consulting using additional drilling information acquired during the period February 2007 to December 2007. This data was not incorporated in the resource estimates of the project’s recently completed feasibility study. Drilling activities during this period were largely in-fill and were focused on the definition of high grade lodes within the Karagba-Chauffeur-Durba (KCD) mineralisation system which have been identified as having significant potential for extraction by underground methods.
Global mineral resources for the project, above a 1.0 g/t Au reporting cutoff, are now estimated at 95.3 Mt at 3.4 g/t for 10.3 Moz Au, Indicated, and 96.5 Mt at 3.6 g/t for 11.3 Moz Au, Inferred.
