While 2008 marked a significant step forward in First Quantum’s progress towards building an international mining company, with a 47% production increase from 228 000 the previous year to 334 000 t of copper, its annual output is set to rise another 65% to 550 000 t in the next two years.
Listed on the Toronto and London Stock Exchanges, First Quantum Minerals Limited is a growing mining and metals company engaged in mineral exploration, development and mining – predominantly in Africa.
The company’s assets in Zambia include the 80%-owned Kansanshi open pit copper-gold mine, the wholly-owned Fishtie copper project and the Bwana Mkubwa SX/EW facility and sulphuric acid plants.
In the Democratic Republic of Congo (DRC), First Quantum operates the 95%-owned open pit Frontier copper mine, and is currently developing the 65%-owned Kolwezi copper-cobalt tailings project. Further afield in north-west Africa, the company operates the 80%-owned Guelb Moghrein copper-gold mine in Mauritania.
“Our total production in 2008 was 334 415 t of copper and 121 830 oz of gold, and the overall forecast for this year is 380 000 t of copper and 220 000 oz of gold,” said company president Clive Newall. He went on to tell Mining Review Africa in an exclusive interview that he expected copper output to rise to about 410 000 t next year, and to 530 000 t in 2011.
TWO NEW SMALLER PROJECTS
“We are busy with the Fishtie copper project – located near the town of Mkushi,” he added. “It’s a relatively small project, and the only way it could be viable would be if we mined the oxide and trucked it to the Bwana Mkubwa plant, which is currently on care and maintenance. We are in the final stages of the permitting process, after which we will make a decision on how we go forward,” Newall continued.
“We also have a small underground project called Lonshi Underground which is currently at feasibility stage,” he explained. “The Bwana Mkubwa plant used to process the very high grade of oxide ore obtained from the Lonshi mine, but we ran out of this ore about 18 months ago, and that is why the plant is on care and maintenance,” he added.
“Since then we’ve been evaluating the underlying sulphide ore body at Lonshi, and it is turning into a significant resource. We are currently trial mining it, and will be trial stoping the ore body in the next few months before we make a production decision,” said Newall. “That would be a relatively small-scale operation – about 35 000 tpa. The process plant will be very small – about 800 000 tpa – whereas the smallest concentrator we have ever built till now has had a capacity of 4 Mtpa,” he declared.
“We don’t want to put a very precise time-line on this project,” Newall stated. “We are trial mining it to make sure it is minable before we go into final engineering design. As far as a project decision is concerned, it should take us about six months to reach that stage,” he estimated.
KANSANSHI – AFRICA’S BIGGEST COPPER PRODUCER
“Our flagship project is of course Kansanshi – located in the North Western Province of Zambia, about 10 km north of Solwezi – which produced about 220 000 t of copper last year,” Newall revealed. “It is expected to produce 245 000 t this year and it should sit around the 250 000 tpa mark for the foreseeable future,” he added. “It’s still the biggest copper producer in Africa by some margin. We are also forecasting 120 000 oz of gold from Kansanshi this year, and that is also expected to remain more or less flat over the next few years – certainly a useful bi-product,” he claimed.
“In terms of its reserve, Kansanshi has another 13 years of life. We are in the process of re-doing the entire reserve and resource estimate, but this will only be available early next year, and will involve conversion of resource to reserve, as well as hopefully growth of resource.
“As far as the future is concerned, we are busy with nearmine exploration in the Kansanshi area to try and push that life of mine up from 13 years, and then we’ve also got Lonshi coming into the picture with that 35 000 tpa,” Newall stated.
FRONTIER’S 19-YEAR MINE LIFE COULD BE EXTENDED
Turning to the DRC, First Quantum is forecasting 96 000 t of copper for this year from its Frontier mine – up from 80 000 t last year – and the company expects output to remain around the 90 000 to 100 000 tpa mark for the foreseeable future. “It will be a long life mine,” he said. The US$226 million (R1.8 billion) operation came on stream in late 2007.
“It’s got another 19 years’ life on the current reserves, and we know that the resource is a lot bigger than we are including in the current mine model. The total resource is of the order of 250 Mt, and we are mining a reserve of around 150 Mt at the moment,” Newall observed.
“We are actively conducting near-mine drilling around Frontier to add to the resource base, and we hope that the total resource of 250 Mt will be growing over the next six months or so,” he stated.
“Another aspect is that ultimately this ore body may also be mineable from underground at the end of its current 19-year mine life. The ore body just keeps on going, and although we haven’t done anything to verify the underground situation at this stage, it does remain a possibility,” Newall said.
He went on to say that before the credit crunch, First Quantum had intended to put down a de-watering shaft at Frontier, and to evaluate deeper parts of the ore body from that shaft. That was deferred because of the credit crunch, but at some point it could be put back on the agenda.
KOLWEZI ON STREAM NEXT YEAR
The company’s Kolwezi tailings project – located in the south Katanga province of the DRC – is costing around US$540 million (R4.3 billion). “At the end of 2008 the project was basically 50% complete, and we are probably close to 70% complete now. Start-up of commissioning is scheduled for Q2 of next year, and we are on track to meet that deadline,” Newall revealed.
“The plant will commence with production of 35 000 tpa copper and 7 000 tpa of cobalt, but those two numbers could double to 70 000 and 14 000 tpa, with an additional capital of about US$40 million (R329 million)” he said. “All things being equal, we could reach that stage by early 2012,” Newall added.
“The reserve at Kolwezi is 113 Mt running at 1.48% copper and 0.32% cobalt, which is a very high grade for tailings, so mine life is just over 20 years,” he explained. “Being a tailings project, there will be no extension of mine life, but we are exploring throughout the Copper Belt on the Congo side. We have large land positions and have been and are continuing to do a lot of work,” Newall pointed out.
At Guelb Moghrein in Mauritania, First Quantum’s copper production last year was 33 000 t, plus 62 000 oz of gold, and this year it is estimated at 39 000 t of copper and 100 000 oz of gold. “Once again, we are doing a lot of near-mine exploration, and we are ever hopeful. We have a 9-year mine life at this stage, and we have been adding to the resource every year,” he said.
ONGOING NEAR-MINE AND REGIONAL EXPLORATION
“As you will have gathered,” Newall emphasised, “there is a great deal of exploration going on behind the scenes as we develop our current projects. We are continuously exploring – not just near mine, but regional exploration elsewhere in Zambia and DRC as well,” he revealed.
“Our budget for last year was US$25 million (R200 million), but the credit crunch resulted in this year’s exploration spend being cut to around the US$10 million (R80 million) mark,” he stated. “It is, however, amazing how – because the input costs such as drilling and assaying for exploration have reduced so much – the actual amount of exploration we are getting for our money is not impacted as much as might have been expected.”
Looking ahead, First Quantum’s track record has been one of developing new mines every two or three years – either through exploration or acquisition. “I think that going forward it will be more of the same. “In terms of geography, we are a major player in the Copper Belt in both Zambia and the DRC, and will continue to be so,” Newall confirmed. “But to maintain our very strong growth profile we do need to diversify geographically – we can’t just restrict ourselves to the Copper Belt, so we are looking for opportunities elsewhere.” The acquisition of the Kevitsa project in Finland was a first step in this strategy.
“Also, we are very much a copper company right now, but we will also start look at other commodities,” he added.
“We are certainly more confident now than we were at the beginning of the year, that we are coming out of the recession. I think that we and everybody else are somewhat surprised at where the copper price is today,” Newall suggested.
“We were anticipating a period of weakness, but copper certainly exceeded our expectations. I believe that in the long run, copper is going to be fantastic. It’s in short supply, there are very few new major projects, and existing production is declining, so in the long run we are looking at strong copper prices,” he predicted.
“In the short term there is still potential for some turbulence, so we are ever watchful. We must retain our focus on costs,” he concluded – “we are one of the lowest cost producers, and we want to stay that way.”