PERTH – Equinox Resources [ASX:EQR] is looking for a new joint venture partner to advance the proposed large, low-grade Lumwana copper project in Zambia. The Aussie-based junior has entered into a letter of intent agreement that enables either it or an in-coming partner to buy the remaining 49 percent of the asset Equinox doesn’t already own from current partner US-based Phelps Dodge [NYSE:PD] for a US$5 million two-staged payment. To stitch up the deal, Equinox is required to farm out a majority stake in Lumwana, probably to a major copper or base metals miner. “Equinox recognises that the participation of a strong partner is the preferred option for the development of a major resource project such as Lumwana,” acknowledged its managing director, Craig Williams. Phelps would retain a one percent net smelter royalty, unless the new JV paid Phelps US$10.6 million upon a development go-ahead or US$12.8 million upon commercial production start-up to cancel it.
Well-connected in the copper business, London-based corporate advisory firm Cutfield Freeman & Co, which was involved in the US$1.3 billion sale of ExxonMobil’s Disputada copper mine and smelter in Chile to Anglo American, has been appointed by Equinox to assist in the search for a new Lumwana JV partner. Possible candidates on Equinox/Cutfield’s hit list could include one of Equinox’s major shareholders, BHP Billiton (which has a 9.9 percent interest in the junior), as well as Rio Tinto, Xstrata, Noranda and Sterlite Industries and perhaps some leading refiners or metal traders such as Glencore International, but not Anglo American which last year exited Zambia.
Equinox told Mineweb the US$13 million bankable feasibility study (BFS) investigating the economic and technical viability of developing Lumwana is expected to be completed next month. The project hosts a measured, indicated and inferred open pit resource totalling 900 million tonnes grading 0.7 percent copper (at a 0.2 percent cut-off) for a contained 6.3Mt of copper including reserves of 348Mt at 0.7 percent copper for 2.5Mt copper. It is forecast copper concentrates for off-site smelting/refining would produce an average of about 100,000 tonnes of copper per annum over an estimated 20-year mine life. Initial capital cost of the first-phase development of Lumwana has been put at about US$280 million, with construction pencilled in to kick off in late 2004 and commissioning slated for mid-2006.
As long as BFS results are positive, Equinox hopes to entice a new Lumwana partner by the end of this year, after which it says they would progress towards securing development funding. “In anticipation of a substantial equity raising component to the project financing, Equinox is currently evaluating the listing of the company on the London and/or Toronto exchanges,” said Williams, who added an offshore listing is likely needed to derive a more attractive valuation for Lumwana in a capital market more responsive than Australia to investment in African resources projects.
......... A recent article, a lot hinges on attracting the new partner not sure what happened to Phelps. Tony
