First Quantum (suite)
First Quantum has been given 24 hours to withdraw from its Frontier and Lonshi properties in the DRC, following the Kolwezi tailings debacle.
Author: Barry Sergeant
Posted: Friday , 27 Aug 2010
RELATED STORIES
Can mineral riches outweigh DRC investment risks?
First Quantum vs. The Grim Reapers
DRC liquidator moves in on First Quantum copper/cobalt project
DRC begins proceedings to liquidate First Quantum project
JOHANNESBURG -
Sodimico, an entity based in Lubumbashi, capital of Katanga Province, on 25 August addressed letters to Comisa and Frontier, two properties in the copperbelt held by Toronto- and London-listed First Quantum, one of the world's biggest copper miners. The letters, which have been authenticated by a DRC official familiar with the correspondence, give notice of 24 hours for First Quantum to withdraw from Comisa (known as Lonshi) and Frontier.
During the preceding week, an international tribunal preparing to hear a dispute over First Quantum's Kolwezi tailings, known as KMT, issued an order prohibiting the DRC government, and/or one of its parastatals, Gécamines, from transfer, or allowing the transfer, of KMT.
The next day, on Friday, London-listed ENRC, one of the world's top 20 miners by market value, announced the USD 175m acquisition of control of a batch of copper-cobalt assets in the DRC, including 70% of KMT
A second order prohibited the DRC and Gécamines from taking any action to enforce a 10 March 2010 judgment of the Appeal Court of Kinshasa, following which First Quantum and KMT were ordered to pay damages totalling more than USD 12bn to Gécamines, the Mining Registry (CAMI), and the DRC. On this score, the Tribunal's orders "are to remain in place until such time as the Tribunal has made a decision on the claimants' request for interim measures".
Separately, First Quantum, through its DRC subsidiary Frontier SPRL, had received a letter dated 5 August 2010 from CAMI, purporting to withdraw the exploitation permit from the Frontier mine. Here, First Quantum believes that "any purported withdrawal of the Frontier permit is contrary to the Mining Code and DRC law, and was initiated against First Quantum in connection with the commencement of arbitration relating to the Kolwezi Project".
Frontier's operations continued unaffected, employing some 1,500 workers. Frontier ranked as the largest tax payer in the DRC in 2009.
On 8 March, First Quantum, Comisa and Frontier were served notices of a case introduced by Sodimico against the DRC before the DRC Supreme Court of Justice. Sodimico requested the cancellation of a February 2000 letter from the-then Minister of Mines, which Sodimico alleged wrongfully withdrew mining titles belonging to Sodimico.
The Supreme Court delivered a judgment purporting to restore certain mineral rights to Sodimico; First Quantum reacted by stating that "these purported mineral rights now conflict with mineral rights held by Frontier SPRL and Comisa SPRL. The conclusions of the Supreme Court are impossible to reconcile with the known history of the mineral rights in question".
Mining at Lonshi has pretty much wound up as the open pit resources were mined out, but First Quantum warned that an adverse final judgment on Frontier remained uncertain, "and may result in an impairment of the company's carrying value of Frontier which could be material". First Quantum recently announced a USD 689m impairment related to KMT.
Selected DRC/Zambia stocks
Copper-cobalt
Stock
From
From
Value
price
high*
low*
USD bn
NFC
CNY 16.91
-7.4%
52.9%
1.589
First Quantum
CAD 58.58
-41.6%
21.5%
4.454
Katanga Mining**
CAD 1.09
-34.3%
105.7%
1.961
Equinox
CAD 4.44
-10.1%
72.1%
2.964
Metorex
ZAR 3.54
-33.9%
46.8%
0.361
Anvil**
CAD 2.81
-34.2%
19.6%
0.399
Mwana Africa
GBP 0.09
-48.7%
40.0%
0.069
Tiger Resources
AUD 0.22
-32.8%
95.5%
0.114
African Copper
GBP 0.04
-57.5%
9.7%
0.054
Africo**
CAD 0.97
-34.9%
38.6%
0.065
Caledonia
CAD 0.06
-40.0%
20.0%
0.028
African Eagle
GBP 0.04
-32.6%
14.8%
0.018
Geovic***
CAD 0.60
-38.1%
9.1%
0.059
El Nino Ventures
CAD 0.04
-80.0%
16.7%
0.002
Averages/total
-37.6%
40.2%
12.138
Weighted averages
-30.6%
47.0%
Gold stocks
Banro**
CAD 1.75
-48.1%
9.4%
0.286
AngloGold Ashanti
USD 42.84
-9.8%
25.6%
15.541
Randgold Resources
USD 90.90
-8.8%
62.7%
8.224
Mwana Africa
GBP 0.09
-48.7%
40.0%
0.069
Mexivada****
CAD 0.12
-79.1%
43.8%
0.005
Gilla Inc.
USD 0.03
-81.3%
114.3%
0.001
Diversified
Freeport-McMoRan
USD 67.11
-25.9%
18.3%
31.571
OM Group
USD 26.18
-33.0%
19.2%
0.808
Vedanta
GBP 18.51
-37.6%
14.5%
7.597
Lundin
CAD 4.17
-27.7%
43.3%
2.281
ENRC
GBP 8.50
-33.4%
9.5%
16.952
* 12-month ** DRC only *** Cameroon **** Congo-Brazzaville
Source: market data; table compiled by Barry Sergeant
First Quantum 'relieved' of two more Congo copper mines
First Quantum has been given 24 hours to withdraw from its Frontier and Lonshi properties in the DRC, following the Kolwezi tailings debacle.
Author: Barry Sergeant
Posted: Friday , 27 Aug 2010
RELATED STORIES
Can mineral riches outweigh DRC investment risks?
First Quantum vs. The Grim Reapers
DRC liquidator moves in on First Quantum copper/cobalt project
DRC begins proceedings to liquidate First Quantum project
JOHANNESBURG -
Sodimico, an entity based in Lubumbashi, capital of Katanga Province, on 25 August addressed letters to Comisa and Frontier, two properties in the copperbelt held by Toronto- and London-listed First Quantum, one of the world's biggest copper miners. The letters, which have been authenticated by a DRC official familiar with the correspondence, give notice of 24 hours for First Quantum to withdraw from Comisa (known as Lonshi) and Frontier.
During the preceding week, an international tribunal preparing to hear a dispute over First Quantum's Kolwezi tailings, known as KMT, issued an order prohibiting the DRC government, and/or one of its parastatals, Gécamines, from transfer, or allowing the transfer, of KMT.
The next day, on Friday, London-listed ENRC, one of the world's top 20 miners by market value, announced the USD 175m acquisition of control of a batch of copper-cobalt assets in the DRC, including 70% of KMT
A second order prohibited the DRC and Gécamines from taking any action to enforce a 10 March 2010 judgment of the Appeal Court of Kinshasa, following which First Quantum and KMT were ordered to pay damages totalling more than USD 12bn to Gécamines, the Mining Registry (CAMI), and the DRC. On this score, the Tribunal's orders "are to remain in place until such time as the Tribunal has made a decision on the claimants' request for interim measures".
Separately, First Quantum, through its DRC subsidiary Frontier SPRL, had received a letter dated 5 August 2010 from CAMI, purporting to withdraw the exploitation permit from the Frontier mine. Here, First Quantum believes that "any purported withdrawal of the Frontier permit is contrary to the Mining Code and DRC law, and was initiated against First Quantum in connection with the commencement of arbitration relating to the Kolwezi Project".
Frontier's operations continued unaffected, employing some 1,500 workers. Frontier ranked as the largest tax payer in the DRC in 2009.
On 8 March, First Quantum, Comisa and Frontier were served notices of a case introduced by Sodimico against the DRC before the DRC Supreme Court of Justice. Sodimico requested the cancellation of a February 2000 letter from the-then Minister of Mines, which Sodimico alleged wrongfully withdrew mining titles belonging to Sodimico.
The Supreme Court delivered a judgment purporting to restore certain mineral rights to Sodimico; First Quantum reacted by stating that "these purported mineral rights now conflict with mineral rights held by Frontier SPRL and Comisa SPRL. The conclusions of the Supreme Court are impossible to reconcile with the known history of the mineral rights in question".
Mining at Lonshi has pretty much wound up as the open pit resources were mined out, but First Quantum warned that an adverse final judgment on Frontier remained uncertain, "and may result in an impairment of the company's carrying value of Frontier which could be material". First Quantum recently announced a USD 689m impairment related to KMT.
Selected DRC/Zambia stocks
Copper-cobalt
Stock
From
From
Value
price
high*
low*
USD bn
NFC
CNY 16.91
-7.4%
52.9%
1.589
First Quantum
CAD 58.58
-41.6%
21.5%
4.454
Katanga Mining**
CAD 1.09
-34.3%
105.7%
1.961
Equinox
CAD 4.44
-10.1%
72.1%
2.964
Metorex
ZAR 3.54
-33.9%
46.8%
0.361
Anvil**
CAD 2.81
-34.2%
19.6%
0.399
Mwana Africa
GBP 0.09
-48.7%
40.0%
0.069
Tiger Resources
AUD 0.22
-32.8%
95.5%
0.114
African Copper
GBP 0.04
-57.5%
9.7%
0.054
Africo**
CAD 0.97
-34.9%
38.6%
0.065
Caledonia
CAD 0.06
-40.0%
20.0%
0.028
African Eagle
GBP 0.04
-32.6%
14.8%
0.018
Geovic***
CAD 0.60
-38.1%
9.1%
0.059
El Nino Ventures
CAD 0.04
-80.0%
16.7%
0.002
Averages/total
-37.6%
40.2%
12.138
Weighted averages
-30.6%
47.0%
Gold stocks
Banro**
CAD 1.75
-48.1%
9.4%
0.286
AngloGold Ashanti
USD 42.84
-9.8%
25.6%
15.541
Randgold Resources
USD 90.90
-8.8%
62.7%
8.224
Mwana Africa
GBP 0.09
-48.7%
40.0%
0.069
Mexivada****
CAD 0.12
-79.1%
43.8%
0.005
Gilla Inc.
USD 0.03
-81.3%
114.3%
0.001
Diversified
Freeport-McMoRan
USD 67.11
-25.9%
18.3%
31.571
OM Group
USD 26.18
-33.0%
19.2%
0.808
Vedanta
GBP 18.51
-37.6%
14.5%
7.597
Lundin
CAD 4.17
-27.7%
43.3%
2.281
ENRC
GBP 8.50
-33.4%
9.5%
16.952
* 12-month ** DRC only *** Cameroon **** Congo-Brazzaville
Source: market data; table compiled by Barry Sergeant