Democratic Republic of Congo – Ivanhoe Mines has reconfirmed its commitment to finalise an agreement for the sale of a further interest of up to 15% in the company’s Kamoa copper project to the government of the Democratic Republic of Congo (DRC), which currently holds a 5% free-carry interest in the project.
The announcement was made by Ivanhoe Mines executive chairperson Robert Friedland and CEO Lars-Eric Johansson on Thursday.
Ivanhoe Mines is co-developing the Kamoa project with China-based Zijin Mining Group, which on May 26, announced its intention to buy a 49.5% share interest in Kamoa Holding Limited, the Ivanhoe subsidiary that presently owns 95% of the Kamoa project, for an aggregate consideration of US$412 million.
This confirmation follows an announcement issued by the DRC Minister of Mines and Minister of Portfolio which stated that any commercial sale of up to 15% in Kamoa Copper SA (the entity that holds the Kamoa copper project exploitation permits or mining licences) to the Congolese State would dilute Zijin future interest in the project.
Ivanhoe Mines has said that this is correct and is understood by both Zijin and Ivanhoe, which have acknowledged the expected future dilution.
Both Zijin and Ivanhoe would be diluted pro rata by any sale of a further interest of up to 15% in Kamoa Copper SA as their interests would be held through Kamoa Holding Limited, and accordingly that entity’s interest in Kamoa Copper SA would be reduced as a result of an increased DRC State interest. The government already is aware of this provision, the statement released by Ivanhoe said.
The ministers also suggested that a due diligence review be performed of Kamoa Copper SA. Ivanhoe does not believe that such a review is warranted, and should not delay the closing of its proposed transaction with Zijin. Ivanhoe previously obtained legal advice to confirm that no consent to the transaction with Zijin is required under Congolese law.
Ivanhoe says that it remains committed to finalising negotiations for the proposed sale of up to a further 15% interest in Kamoa Copper SA to the Congolese State.
During a recent series of meetings, a senior Ivanhoe Mines team, led by Johansson, made a number of proposals to senior representatives of the DRC government regarding the proposed sale, on which Ivanhoe is awaiting a response.
While the recent meetings also discussed Zijin’s planned investment in the Kamoa project, the two transactions are separate matters and Ivanhoe’s legal advice confirms that there is no basis for delaying the Zijin transaction pending settlement of the increased DRC State interest in Kamoa Copper SA.
More than US$330 million has been invested to date by Ivanhoe and Kamoa Copper in Kamoa’s exploration and mine planning.