TORONTO (miningweekly.com) – TSX- and LSE-listed First Quantum Minerals is confident that it remains within the terms of a mining contract with the government of the Democratic Republic of Congo (DRC), for the company's Kolwezi tailings-recovery project, president Clive Newall said on Tuesday.

Last week, Reuters reported that the DRC had cancelled the copper and cobalt mining contract, citing Deputy Mines Minister Victor Kasongo.

The unit had failed to begin commercial production within the agreed timeframe, Kasongo said.

The Kolwezi tailings project is owned by First Quantum (65%), DRC State mining company Gecamines (12,5%), the Industrial Development Corporation of South Africa (10%), the International Finance Corporation (7,5%) and the government of the DRC (5%).

“As far as we and our partners are concerned, all steps undertaken to date regarding the development of this project are within the terms of the contract,” Newall told analysts and investors on a conference call.

The company has seen media reports about the cancellation of the contract, but has not received any notification from the government, “either official or unofficial”.

“So we have nothing to respond to as yet,” Newall said.

In the meantime, the company has obtained legal advice that the Kolwezi mine convention is valid and binding, and that all terms have been complied with.

“So we know of no legal basis for the cancellation of the contract.”

However, because of the “delicate” nature of the situation, Newall declined to discuss the specific details of the contract.

“But we are taking all of the appropriate actions to bring this to a conclusion,” he assured.

“We are all in contact with government to work through any misunderstandings and get the process back on the rails.”

The Kolwezi tailings, or  Kingamyambo Musonoi Tailings (KMT) project is scheduled for commissioning in the second quarter of 2010.

The plant will initially produce 35 000 t/y of copper cathode and 7 000 t/y of cobalt hydroxide and is designed to double capacity during the first year for a budgeted capital cost of approximately $40 million.

The mine life is expected to be 22 years at the expanded annual production rate of 70 000 t of copper cathode per year.

The $585-million project was about 63% complete at the end of the second quarter, First Quantum said on Monday.

According to Reuters, the DRC has now completed a lengthy process in which it reviewed and renegotiated 61 contracts entered into between State mining firms and foreign companies during a civil war in the country, which occurred between 1998 and 2003.

The final contract to be either approved or renegotiated is for the Tenke Fungurume project, which is owned by Freeport-McMoRan Copper & Gold, Lundin Mining and Gecamines.