AFRICA Fri 30/01/2009Fortunes turn for copper minerMichael...

AFRICA Fri 30/01/2009
Fortunes turn for copper miner
Michael Quinn, 26 January 2009

THERE are few acts as reassuring in these uncertain times as a director reaching into his wallet and pulling out nearly $C200,000 to buy a significant swag of shares in his own company.

Bill Turner, the managing director of copper miner Anvil Mining, bought the 137,900 shares earlier this month – he already held 824,661 shares and 881,439 unlisted options – on the same day the company announced the favourable details of a government mining review carried out on its Kinsevere and Dikulushi projects in the Democratic Republic of Congo.

Concerns that the company may have to pay up to $US150 million and divest significant interests in the projects proved unfounded, with ownership levels of 90% (Kinsevere) and 95% (Dikulushi) maintained, and modestly higher rent payments (a 2.5% royalty) implemented at the former. Anvil is also now required to make a cash payment of $US15 million to state mining company Gecamines, while discussions on an amended exploration joint venture at Mutoshi are continuing and are expected to be concluded mid-February, according to an analyst at RBC.

North American analysts that cover Anvil were unsurprisingly positive on the conclusion of the review.

“The deal is better than we had expected, and allows Anvil the opportunity to secure a line of a credit,” GMP Securities noted. “Anvil could not move forward with the line of credit until the Mining Review was resolved. This press release does not guarantee that Anvil will obtain the financing, but we believe their chances have now improved significantly. Management has notified us that they now have term sheets to obtain financing of $US100-125 million. We understand that the lead banks are Frotis, BNP and Standard Bank. Management also stated that they can receive this line of credit as early as April 2009. Once the credit line is obtained, Anvil can proceed with the Kinsevere expansion into an SX-EW. We have accounted for this in our model. We now assume that Anvil will build the SX-EW plant and have it running by the second quarter 2010. Further, we have assumed that Anvil will obtain the $US125 million financing and spend approximately $US200 million in 2009 to complete the SX-EW plant. Anvil should have enough money to complete this expenditure as on the third quarter 2008 conference call, management noted that the cash level as of October 31st was about $US90 million.”

Turner and Anvil shareholders would undoubtedly concur with the summation proffered by Kerrie Smith at Haywood Securities: “The title review was an extremely painful event for all since being initiated in June 2007.”