Australian mining major Equinox Minerals reports that it sees a lot of potential to establish a diversified midtier mining house in Zambia focused on developing the significant base metal opportunities that the north-western region of Zambia offers.
This comes off the back of Equinox reporting that the expected ramp-up of the Lumwana project, currently the continent’s biggest greenfield mining project, is on track and will be achieved soon. Reports also indicate that there are ample opportunities to increase the resource at Lumwana.
Equinox vice-president: investor relations Kevin van Niekerk reports that the company plans to establish the mining house by lever- aging its corporate skill set along with the sizeable and expected Lumwana cash flows to provide a stable foundation on which to build the new company.
Commenting on the expected ramp-up of the Lumwana project, Van Niekerk reports that the orebody-related issues experienced earlier in the year are expected to improve in the coming months as the mine moves below the weathering profile, the uranium zones and into more consistent sulphide ore. He adds that availability and productivity parameters continue to improve.
“In June, the company implemented measures to further increase productivity and mine output. These included the engagement of productivity consultancy Jamieson Group to assist in better focusing Equinox’s internal training programmes and improve workforce skills and expertise. In addition, Golder Associates was contracted to review and assist in the study of the Lumwana mining reserve reconciliation and mine scheduling,” says Van Niekerk.
He adds that the 20-million-ton-a-year processing plant continues to perform to expectation and is capable of producing in excess of its design capacity based on achieved throughput rates to date.
In addition to the significant copper resource at Lumwana, the project also holds significant uranium potential.
However, the company will not let the current global interest in the commodity affect its plans to fast-track the development of its uranium processing plant.
“At this time, the company is really focused on getting the Lumwana project ramped up and into production. “Following the completion of project ramp-up, there will still be significant opportunity in the licence to further expand and improve the concentrator and mine throughput rate, and to assess and evaluate the other additional near-mine deposits discovered to date.
“In so far as our uranium plans go, the company has already completed its uranium feasibility study. This investigated the on-site treatment of discrete and high-grade uranium mineralisation contained within the Lumwana copper pitshells and confirmed the economic viability of a potential on- site uranium treatment plant,” says Van Niekerk.
He adds that the Environmental Council of Zambia has already approved this project’s environmental-impact assessment report.
Stockpiling of uranium ore from the Lumwana project is well under way and it is expected that the company will have about three-million tons in the stockpile by the end of the year.
“The company is ready to go; however, the decision to proceed with the development of the uranium processing plant is a board matter. “Should the company be successful in negotiating viable uranium offtake agreements and feel confident that the requisite project capital financing is available, the go-ahead will be given. “The company estimates that plant construction will take 18 months to 24 months and that this opportunity could increase revenues by between 10% and 15%,” says Van Niekerk.
In addition to the current resource avail- able from the Lumwana project, there is a possibility of project expansion.
In 2008, drilling was undertaken at the Kanga prospect that lies directly on strike from the Malundwe openpit, where mining is currently taking place. Commenting on an expansion into the Kanga prospect, Equinox CEO Craig Williams said: “Such an extension could materially impact on the economics of Lumwana with higher-grade Kanga ore possibly displacing lower-grade Chimiwungu ore from the current mine schedule. In addition, this data will further advance the positive merits of bringing forward our process plant expansion plans.”
As a result of exploration work done on the project in 2009, the company esta- blished that the Kanga prospect offers an inferred mineral resource of about 78- million tons.
“Additional infill drilling is required to raise the level of the Kanga resource to indicated status; however, it is noted that the consistency of grade and the continuity of mineralisation at Kanga is comparable with that within the current Malundwe pit design,” says Van Niekerk.
He adds that Kanga is just one anomaly focused on. On the 1 355-km2 prospect, the company has several other anomalies, including the North Dome prospect, the Mwombezhi Dome prospects at Kababisa, Kamaranda, Malundwe West and Lubwe, and those at Kamasingo North and Kamaranda, north-east of Lubwe. Edited by: Martin Zhuwakinyu
EQN Price at posting:
$3.62 Sentiment: Hold Disclosure: Held
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