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Equinox to seek finance for uranium plant, mulls M&A 0 COMM
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By: Liezel Hill
5th March 2010
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TORONTO (miningweekly.com) - Equinox Minerals, which owns the Lumwana copper mine in Zambia, plans to seek funding and offtake deals for its uranium project and will also consider acquiring a second copper project or mine, CEO Craig Williams said on Friday.
Uranium ore Is being stockpiled as it is mined at Lumwana, and the company will likely have most of it on surface by around this time next year, Williams said.
The capital cost for a uranium treatment plant has been pegged at around $200-million, and it is likely that the financing and offtake deals will end up being tied together, he said in an interview after a presentation to investors in Toronto.
The company has already received approaches from utilities, traders and other parties expressing interest in the uranium project, but wanted to focus on getting the Lumwana copper project up and running at full steam.
"But I think we are now in a position where we can start talking more sensibly to the uranium players and we'll be kicking off a programme in the coming months to do that," Williams said.
Once the funds and offtake are in place, the project will take between 18 and 24 months to build.
The company has already completed a full bankable feasibility study and plant design, for a 900 000 t/y plant, producing 2-million pounds a year of uranium.
The environmental impact assessment has been approved by the Zambian government and the project is fully permitted.
"Realistically, the Lumwana uranium project is one of the most advanced in the world," Williams commented.
"I mean, the ore is already on the stockpile."
ACQUISITION STRATEGY
As far as acquisitions are concerned, the company would like to add a second producing or near-production asset, preferably copper - or copper with a precious metals credit - and which provides the company with some geographic diversification.
The firm will target jurisdictions that have at least equal or lower sovereign risk compared with Zambia.
Size wise, Williams estimates he will be looking at assets producing somewhere in the range of about 5 000 t/y to 150 000 t/y of copper.
"That intermediate size is probably our sweet spot," he said.
"There's going to be a few other people looking there too, as you can imagine, but I think we'll be pretty well positioned."
LUMWANA EXPANSION
Equinox plans to produce 135 000 t of copper from Lumwana this year, at an average cash cost of $1,35/lb.
With commissioning issues having been ironed out and the 20-million-ton-a-year operation expected to reach steady state levels in the second half, the company is turning its attention to expanding capacity further, initially to 24-million tons, but eventually to more than 30-million tons a year.
The phase one expansion is more a case of optimisation and debottlenecking, mainly on the mining side of the operation, and will require limited additional capital.
For the second phase, Equinox is drawing up plans for an expansion to somewhere between 30-million to 35-million tons a year, to take advantage of its huge resource and long mine life at Lumwana.
A scoping study on the phase-two expansion should be completed later this year, which would then be followed by a detailed feasibility study.
Williams said it will likely be between three and five years before the phase-two expansion is ramped up, likely to coincide with the development of the second, much larger orebody at Lumwana, Chimiwungu.
Shares in Equinox gained 1,7% on Friday, to C$3,60 apiece by 15:32 in Toronto.