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First Quantum expects mining tax compromise

A First Quantum
high pressure leach
facility in north-
west Zambia
London, England — MININGREVIEW.COM — 25 September 2008 – Canadian-listed First Quantum Minerals Limited (FQM) – an emerging mining and metals company, and one of the faster growing copper producers in Africa – says it expects Zambia to agree to a compromise on its new mining tax regime in coming months.

Reuters quotes company president Clive Newall as saying in an address to a mining conference here: “We expect to reach a result that everybody is quite happy with.”

He added that the recent death of Zambia’s president, which will require a new election, was expected to cause a slight delay in a new tax agreement. An election is expected before the end of the year.

Reuters reports that mining firms in Zambia have strongly opposed the new 25% windfall tax, plus higher royalty and corporate taxes, introduced in April. Meanwhile, the Zambian tax authorities have suspended collection of the new higher taxes.

First Quantum – which recently launched its Frontier mine in the Democratic Republic of Congo (DRC) – says the government there has a renewed commitment to quickly resolving a review of mining licences, which has dragged on for 18 months.

“Now there is serious activity,” Newall said, “and it should be completed in the next couple of months.” He declined to give details.

Meanwhile Equinox Minerals – which is building Lumwana, Africa’s largest open-pit copper mine in north-western Zambia – says it expects its existing agreement with the Zambian government will shield it from higher taxes being implemented in the country.

Speaking to analysts and investors in Toronto, CEO Craig Williams said his company’s 2005 development agreement, which included lower taxes, had been respected so far, and that he expected that would continue.

“There are no guarantees here, but we do believe our development agreement has strength,” he said, but added: “There might be some room for compromise on both sides.