TORONTO (miningweekly.com) – Africa-focused project developer Ivanplats has commissioned a study to investigate developing the significant Kamoa copper discovery, in the Democratic Republic of Congo (DRC), in two phases, as it seeks to cut its capital expenditure.

Ivanplats, under the leadership of billionaire founder Robert Friedland and CEO Lars-Eric Johansson, on Tuesday said a refocused National Instrument 43-101-compliant Kamoa development study was expected to result in the declaration of the first mineral reserves at the Central African copperbelt project, and to report on establishing an appropriate phased approach to achieving first production and the progressive expansion of the Kamoa project to eventually include a copper smelter in the country.

The first phase of mining would target high-value copper concentrate production from the high-grade copper mineralisation found in the shallow, underground resources. The initial mill feed would come from Kansoko Sud and lead into the Centrale area of Kamoa's gently dipping mineralised zones that collectively contain estimated compliant indicated resources of 224-million tonnes grading 3.85% copper, at a 3% copper cutoff and a minimum 3 m vertical mining thickness.

The second phase would entail a significant expansion of the mine and mill and the construction of a large smelter, supported by the full extent of the Kamoa resources.

Friedland said the revised mining scenario was being developed to deliver the best balance of a lower initial capital cost and the shortest time to first production, while maintaining the company's commitment and momentum toward a major mine, mill and smelting operation.

"This scenario, if confirmed by current studies and financial modelling, could provide for a 2017 start of copper production from Kamoa's first phase of development, subject to available financing. It would require significantly lower capital costs than previously considered launch scenarios, while preserving the viability of our medium- and longer-term development options,” Friedland said.

The study would be conducted by consulting engineering firm Hatch of South Africa, and it is expected to be complete in the second half of 2014. An updated preliminary economic assessment of the preferred development scenario is also expected to be finished in the fourth quarter of this year.

Johansson said excavation of the first mine-access decline at Kamoa is expected to begin early next year. The decline would provide access to the high-grade, near-surface copper resources that would be targeted for the planned first phase of production using the room-and-pillar mining method.

"To get into production as quickly as possible, our current strategy is to start with a smaller, simpler and more capital-efficient mine. Given the Kamoa project's significant estimated mineral resource tonnage and its large lateral extent, we continue to believe that potential mining rates of up to 20-million tonnes a year, eventually, could be achieved by operating in multiple mining areas and completing a series of production expansions to maximise the mine's capacity,” Johansson said.

ADDING VALUE
The start-up scenario that the development study would consider would also deal with the need to sell copper concentrates as an interim measure pending the construction of the planned smelter in the vicinity of the Kamoa mine.

"The DRC government earlier this year mandated an end to exports of copper and cobalt concentrates, which is intended to encourage investments in additional mineral processing facilities within the DRC.

"The restriction presently is due to take effect in 2014. The country's current mining code requires a permit for the export of unprocessed minerals, which should be granted if insufficient processing facilities exist within the DRC or if it can be demonstrated that exports would generate a net benefit to the country,” Johansson explained.

He added that a smelter would also improve the long-term economics of the project by reducing transportation costs and generating significant additional revenues through the sale of the sulphuric acid by-product of the smelting process.

The Hatch development study would assess the most cost-effective smelter capacity and relevant smelting processes. It would also provide details on equipment, capital and operating costs as part of an analysis of the scope of proposed mining and processing to confirm Kamoa's commercial viability.

However, the timing of the smelter’s construction is dependent, in part, on providing more generating capacity within the DRC's power supply grid.

In 2011, Ivanplats and the DRC's State-owned power company, La Société Nationale d'Electricité (SNEL), agreed to upgrade two existing hydroelectric power plants, Mwadingusha and Koni, to feed up to 113 MW into the national power supply grid.

SNEL would provide the Kamoa project with 100 MW from the grid, which would be sufficient to operate the initial mine. In April, SNEL signed another memorandum of understanding with Ivanplats to upgrade a third hydroelectric power plant, Nzilo 1, which was expected to provide about 100 MW to the grid when completed in 2022, entitling Kamoa to receive another 100 MW from the grid. The combined total of 200 MW from the grid would cover the power requirements of Kamoa's smelter and future mine expansions.

"We believe our planned Kamoa development would meet the DRC's export criteria, if required. The Hatch development study will include a review of the economic impact of copper concentrate sales and the company will investigate the regulatory procedures required to conduct limited-term concentrate sales as a prelude to, and in the context of, our integrated plan to build a major smelter in the DRC to produce higher-value blister copper," Johansson added.

Friedland added that confidential discussions and due diligence studies were advancing, with a selected number of international private and State-owned mining companies having expressed interest in potential participation in the Kamoa project. Ongoing talks could lead to the formation of a significant strategic partnership or syndicate for exploring and developing the Kamoa discovery and associated infrastructure.

A new independent estimate detailed in the March Kamoa technical report more than doubled the high-grade indicated resources at the discovery, resulting in the project now ranking as Africa's largest high-grade copper discovery and the world's largest undeveloped high-grade copper discovery.

At a 2% copper cutoff grade, Kamoa's indicated resources presently total 550-million tonnes grading 3.04% copper and containing 36.9-billion pounds of copper. At the 2% cutoff, Kamoa also has 93-million tonnes of inferred resources grading 2.64% copper, which contain an estimated 5.4-billion pounds of copper.

At a lower 1% copper cutoff grade and a minimum vertical mining thickness of 3 m, Kamoa's indicated resources total 739-million tonnes grading 2.67% copper and containing 43.5-billion pounds of copper. The inferred resources were estimated to total 227-million tonnes grading 1.96% copper and containing 9.8-billion pounds of copper.

A fourth phase of drilling was currently under way.