Equinox Minerals Is Well On Target To Produce 135,000 tonnes
April 08, 2010
Equinox Minerals Is Well On Target To Produce 135,000 tonnes Of Copper In Concentrate This Year
By Charles Wyatt
A little bit of round-the-houses action was required to track down Craig Williams, chief executive of ASX and TSE listed copper producer Equinox Minerals. Having eventually discovered from a less than helpful telephonist that he was in Chile, it was not too difficult to conclude that he might be attending the CRU’s 9th World Copper Conference where, lo and behold, he was scheduled as a speaker. The Grand Hyatt Hotel in Santiago, where the Conference is being held from 6 to 8 April, is not short of phones, so the answer was to ring the hotel, as it was odds-on the speakers have rooms there. That call confirmed that he had a room booked, but had not arrived. A few hours later there was Craig on the end of the line asking that the piece on Equinox be delayed by 24 hours, as a crucial bit of news was at the final draft stage. No problem with that, and the excellent production figures in the quarter to end March were certainly worth the wait.
Craig’s presence at this conference must reflect confidence that his company’s 100 per cent owned Lumwana copper mine in Zambia is going well, as it continues to expand production towards a target of 135,000 tonnes of copper in concentrate this year. This time last year he would not have spared time to spend the best part of a week in Santiago, as Lumwana was just starting production. Now, though, he is ready to chat to his peers and promote his company and that must be a very good sign. Maybe he is looking for another deal, now that Lumwana is up and running, or maybe he is seeking a more congenial shareholder than First Quantum, which is pretty unpopular in Zambia as well as the DRC. Its Kolwezi tailings project has effectively been sequestrated, its Frontier copper mine is under threat of confiscation, and it has been hit by a US$12 billion claim for damages. On the Zambian side politicians remember it for not paying adequate dividends to ZCCM from the Kansanshi copper mine.
As First Quantum is already exiting Africa with the acquisitions of the Kevitsa mine in Finland and Ravensthorpe in Australia it might be quite happy for its shares to be placed and this would give Craig more flexibility in choosing possible acquisition targets. Where better to be than at the world’s premier copper conference, as a new life opens up to Equinox as a mid tier producer/acquisitor? Craig has never neglected his duties to the population of Zambia, and the latest example is the deal he’s struck with Zesco, the Zambian power authority, in relation to power charges incurred during the construction stage at Lumwana. Equinox agreed to pay US$4 million, and it effectively cemented the relationship with Zesco as hooking up Lumwana was a key extension to the interconnected power grid in Zambia and enabled Zesco to connect the rest of the north western province to the national grid. Such service is unlikely to be forgotten by the Zambian authorities when the time comes to allocate new exploration acreage, but Equinox has a fair bit already and may want to hedge political risk.
Lumwana is one of only four major new copper mines that have been developed in the world during the last decade, so the whole copper world will have heard of Equinox. It has measured and indicated resources amounting to 358 million tonnes at 0.767% copper, and a further 564 million tonnes at 0.63% copper in the inferred category. That would give it a 37 year mine life at the current mill throughput design rate of 20 million tonnes per year. In 2009, which was the first full year of production, there was a steady improvement quarter-on-quarter, with ore mined starting at 1.8 million tonnes and advancing to 4.2 million tonnes. The head grade averaged 0.95% copper throughout the period and recoveries increased from 80 to 92 per cent. All of which resulted in total production in 2009 of 241 million pounds copper in concentrate. The target for 2010 is 300 million pounds. Finding a smelter for the concentrate is no problem and there five year off-take agreements are in place with the Chambishi and Nchanga smelters which will take all concentrate this year.
As promised Craig has now released the production figures for the first quarter of this year, and everything appears to be bang on target. The output of 67 million pounds of copper in concentrate was 37 per cent ahead of the first quarter last year when Lumwana was just starting. These results are especially good, explains Craig, because they were achieved during the wettest time of the year which tested mining and mill ramp-up to the limit. What’s more, they are right in line with the annual target. As if the rain was not enough of a hindrance, the power packed up for four days when a pylon came down west of Solwezi as a result of vandalism. And in addition to this the mill had to be shut down for seven days to replace the liners in the primary crusher. It says a lot for the team that has been built up at Lumwana that process plant recoveries were maintained at 92 per cent throughout this quarter. Looking ahead, expansion of the mine fleet should boost production capacity even further.
One of the fascinating things about Lumwana is that it is also a potential uranium mine and this seems not to have had any impact on the rating whatsoever. At the moment the uranium ore stockpile on the ROM pad amounts to around three million tonnes at 995 parts per million (ppm) uranium and 0.8% copper. Just as a matter of record that would deliver about 1.8 million pounds of uranium which would be worth US$76.5 million, with more than twice that value in the copper at the current price. A full bankable feasibility study and plant design has been completed for a 0.9 million tonnes per year plant producing two million pounds of uranium per year, but Craig is in no hurry. First off he wants to put together off-take agreements for the uranium, and second he is looking for a better uranium price. Until he gets those he will go on stockpiling and adding value to his company.
He has plenty on his plate with the Phase 1 expansion scheduled to boost throughput at the mill to 24 million tonnes per year. Then there will be Phase 2, with the development of Chimiwungo playing a major role. Last, but not least, he may have tracked down an ideal acquisition at the Santiago Conference. Base metals, in production or very nearly, and in a country other than Zambia would the requirements that would help a project onto his wish list. Equinox is certainly going places.