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Mining company Kumba Resources renews a joint venture agreement with Adastra Minerals to redevelop the Kipushi Mine in the south of Democratic Republic of Congo (DRC) - in terms of which Kumba may acquire a 50% shareholding in AdastraÆs interest in the DRC mine. With Kumba investor relations manager Trevor Arran STEPHEN GUNNION: Trevor, does this mean that Kumba plans to take up the 50% stake in Adastra? TREVOR ARRAN: ItÆs an Adastra project - weÆve got a 50% right as the project progresses, and at this stage the answer is yes. We think itÆs a fantastic project - obviously we need to go through a technical and economic re-assessment of the existing operation, and then take that into a feasibility study commencing later this year. STEPHEN GUNNION: Does Adastra own the entire interest in Kipushi? TREVOR ARRAN: Yes, thatÆs correct. STEPHEN GUNNION: So you would effectively have 50% of Kipushi then? TREVOR ARRAN: ThatÆs correct, yes. STEPHEN GUNNION: A lack of foreign exchange and operating supplies led to production stopping in 1993 - has that been resolved, and what else will you be looking at in your technical and economic assessment? TREVOR ARRAN: The Kipushi Mine is a fantastic world-class deposit. The mine as it stands stopped production in 1993 - it used to produce both zinc and copper. Obviously there were a number of problems including foreign exchange, operating supplies, and the political scenario in the DRC at the time. ItÆs a deposit thatÆs got a measured and indicated resource of just under 17-million tons - itÆs a superb zinc graded deposit of just under 17% and 2.2% copper. WeÆre looking forward to actually having a look at whatÆs available from a technical and economic point of view, and then most exciting for us is that the ore body is open to depth and on strike. STEPHEN GUNNION: Are you comfortable with the political situation in the DRC at the moment? TREVOR ARRAN: I think we are actually quite committed to progressing the project. WeÆve had a very good relationship with both the DRC government and Gecamine - the government agency that was running a number of mines in the DRC for many years. Just saying we would like to get involved again is showing some sort of commitment to both the country and the government. STEPHEN GUNNION: How will the recent surge in zinc and copper prices - that I think were exacerbated by Hurricane Katrina - add to your decision? TREVOR ARRAN: I donÆt think thatÆs been part of it - weÆve been looking at the Kipushi project for a number of years, and the reason it hasnÆt got off the ground is obviously the change of government, the political situation, and obviously the sort of slow progress made in terms of awarding of licences, etcetera as the government got to grips with the mining legislation etcetera - so thatÆs been more the reason rather than the recent spikes weÆve seen in commodity prices. STEPHEN GUNNION: Of course that must make it much more lucrative to re-open the mine? TREVOR ARRAN: Yes thatÆs a factor, but importantly we have the Zincor Refinery in South Africa that certainly would benefit from the concentrate we envisage producing there - moving the concentrate from the DRC to South Africa for zinc production. STEPHEN GUNNION: Kipushi has essentially been under care and maintenance - is that right? TREVOR ARRAN: Correct. I think in the 1980s and early 1990s the Chinese spent a fair amount of money in terms of installing and maintaining a pumping system - bearing in mind in that part of the world water ingressing into mining operations is a huge problem - so to keep it on care and maintenance was essential, bearing in mind that you can lose a mine if you donÆt maintain decent operations, particularly pumping. STEPHEN GUNNION: So when your assessment is completed by November 2005 - if the decision is positive - you could move ahead quite quickly? TREVOR ARRAN: Yes, I think a positive aspect about Kipushi is that the current ore body is very well understood - itÆs been mined since 1925 so thatÆs almost 70 years. The key is obviously the deeper ore body thatÆs really a superb extension of the current ore body. WeÆd be quite keen to move this into feasibility stage bearing in mind that will take a little while post November.
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