TSX-listed Katanga Mining has agreed to sell two deposits, Mashamba West and Dikuluwe, in the Democratic Republic of Congo (DRC) to State-owned mining company Gécamines for up to $825-million.
Katanga said on Friday that Gécamines will either replace Mashamba West and Dikuluwe, which form part of Katanga's Kamoto property, with other deposits, containing 3,99-million tons of copper and 205 629 t of cobalt, by July 1, 2015, or start paying the purchase price of $825-million by 2012, from royalties and dividends in the Kamoto Copper Company (KCC), which it coowns with Katanga.
The value of the deposits was determined from a 2006 feasibility study on the property, but is subject to review by the companies.
The announcement follows press reports that the two deposits were included in an agreement between the DRC government and China.
Reuters reported on January 28 that, in exchange for Chinese loans, Gécamines, China's Sinohydro Corp and China Railway Engineering Corp would create a joint mining venture with rights to the two mining concessions.
KCC has agreed to fund and assist with exploration, to help Gécamines find replacement deposits, and Gécamines will pay the exploration funds back to KCC out of its revenues from the company.
The Mashamba West and Dikuluwe deposits were not scheduled to start producing oxide ores until 2020 and 2023 respectively, Katanga said on Friday.
The company recently completed a merger with former rival Nikanor, enabling the company to consolidate Katanga's Kamoto mine and Nikanor's nieghbouring KOV operation, which were previously part of the same mine complex, to create a single site operation.
The merged company aims to be the world's largest cobalt producer, and Africa's largest copper producer.
Meanwhile, Katanga and other miners with assets in the DRC are still waiting for the outcomes of a review into mining contracts in the country.
On Tuesday, Mines Deputy Minister Victor Kasongo said the review had exposed levels of irregularities that far exceeded its expectations.
He said that all contracts would now have to be renegotiated in different degrees.