London, England — MININGREVIEW.COM — 06 August 2008 – Katanga Mining Limited – which operates a major mine complex in the Democratic Republic of Congo (DRC) producing refined copper and cobalt – has signed a new memorandum of understanding (MoU) with its joint venture partner, DRC government-owned Gécamines.
A Katanga Mining news release issued here revealed that the key provisions of the new agreement were that:
- 75% of the share capital of the merged JV is allocated to Katanga’s wholly-owned subsidiaries KFL Limited and GEC, and 25% to Gécamines; consistent with each of the existing joint venture agreements.
- Share capital of the merged JV will be increased from US$1 million (R7.5 million) to US$100 million (R750 million).
- Upon implementation of the merged JV, 5% of all additional joint venture funding until the project reaches copper output of 150 000 tpa will be non-interest bearing, and the remaining 95% will bear interest at a rate not greater than LIBOR plus 3%.
- The royalty rate for equipment and facilities provided by Gécamines, as well as for ore reserve depletion, will increase from 1.5% to 2.5% of net revenues.
- The first cash payment to Gécamines for transfer of mining rights under article 4.3 of the February 7, 2008 agreement is US$5 million (R37.5 million), and will be made on implementation of the merged JV.
- The Board of KCC will be increased to eight members, three of whom will be appointed by Gécamines, and KCC will assume day-to-day management of the merged JV’s operations within 12 months from the date of this MoU.
Katanga President and CEO Arthur Ditto commented: “We look forward to a closer working relationship with Gécamines, and to achieving the full financial and operating synergy that merging the two joint ventures will bring for the benefit of everyone.”
Gécamines director-general Paul Fortin said: “This joint venture is very important to Gécamines and to the economy of the DRC, and we believe the MoU provides a positive framework for its future success.”