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Anvil Mining steps up copper production

By Pattie Beales

Companies in this story
Anvil Mining Limited
First Quantum Minerals Ltd

Kolwezi, D.R.C. -- Anvil Mining (AVM-T) is producing more copper at its Dikulushi mine in the Democratic Republic of Congo, and soon will be producing at the Mutoshi project, in the same country.

The DRC introduced new mining legislation in 2003. The country has a law that limits mining companies from holding more than 20,000 sq. km. Anvil holds about 15,000 sq. km around its Dikulushi property, outside of Kilwa in southeastern DRC, as well as 5,000 sq. km at the Mutoshi and Kinsevere projects, outside of Kolwezi. The Dikulushi mine is about a 400-km road trip from Lubumbashi.

The Mutoshi project is a joint venture with La G�n�rale des carri�res et des mines (G�camines), the exploration and mining arm of the Congolese government.

G�camines' past-producing Mutoshi open pit is partially flooded and filled with sparkling blue-green water. Part of the town's water supply comes from here.

Mutoshi entered production in 1905, as a gold mine; only later did it become a copper producer.

Between 1960 and 1987, G�camines operated a mill nearby, which achieved a copper recovery of about 60%. About 38 million tonnes of ore grading 1.8% copper were mined and milled. Coarse rejects/tailings from a wash plant were allowed to spread over a nearby riverbed plain. Anvil plans to re-treat these copper-rich tailings using a heavy media separation (HMS) plant.

The company has experience processing ore using HMS technology. The Dikulushi mine used this process for the first couple of years of operation.

Hydroelectric power lines traverse the property and actually cross the tailings area. Another bonus to the economics of the project is that no waste stripping is required. All that's needed are front-end loaders, trucks and a plant.

"It's a beautiful project," said William Turner, Anvil's president. "It allows us to get our feet on the ground, get our people in place, our office set up, and have a real capability as hard-rock projects advance."

The company completed its due diligence in early January and has been sampling and surveying the tailings to determine the resource. Long channels have been dug into the green-coloured sands. This has been a bit of a challenge because the riverbed evolves with rain and January is the wettest month.

From test pits dug to the original riverbed surface, Anvil took 450 samples of about 50 kg each. These were then reduced to 2 kg before being sent for analysis. A resource estimate is expected later in March.

The tailings are said to average 4-5% copper, though some areas grade up to 12%. The deposit has been sampled at regular intervals perpendicular to its 14-km length and across a width of 200-300 metres. Its thickness averages 1-3 metres.

The partners have a permit to exploit the resource. Anvil has commissioned Australian-based Intermet Engineering to complete design work for a 1-million tonne-per-year HMS plant. The plan is to begin production with a HMS plant, then switch to a flotation circuit after a few years.

G�camines established a significant inferred copper resource adjacent to the Mutoshi pit. Northwest of the pit is a synclinal structure with a 2-by-4-km imprint, which hosts two deposits. Together the deposits are about 20 metres wide with a small gap between them.

The area has been mined artisanally in the past. There is no explanation for the gold in this area; however, artisanal miners are panning gold in the neighbourhood.

Terry Lemmon, Anvil's chief exploration geologist, said G�camines concentrated on following stratigraphy and did not do much structural work. "Once we begin, we will come up with a different picture," he said.

The property is in the Kolwezi Klippe, an area known for its copper deposits, and composed of sediments that underwent faulting and were thrust up from their initial site of deposition. Part (30 sq. km) of the property is covered by Kalahari sand and has seen little exploration.

Anvil is earning a 70% interest in Mutoshi; G�camines will retain 20% and De Moura Enterprises, 10%.

A few kilometres from Mutoshi, between the pit and town, the road bisects a cobalt mining operation, where hundreds of artisanal workers wash and hand-pick cobalt from soil. The workers concentrate the friable mineralized breccia to about 8% cobalt from 2%.

Anvil stressed that the current mining situation is temporary. "When we took over this project, we didn't want to lay off anyone," said Michael O'Sullivan, Anvil's general manager of development in the Congo.

The miners were digging holes 3-4 metres deep and sometimes working laterally from there. Anvil allows the holes to extend to a depth of only 1-1.5 metres.

The company also asked the artisanal union, AMEC, to take control. The miners are registered and have to be at least 16 years old to work (previously, children were working alongside the men).

"We wanted to improve conditions, so we brought in the heavy equipment," said Turner. "We're renting it from Kolwezi. The equipment digs the rock and makes it more accessible. There is someone there to make sure it is done safely. We see this as a way to make some money in the interim but also as a way to be socially responsible and keep these people gainfully employed until we put in a plant."

Anvil is setting up an exploration office in the area and preparing to drill the cobalt resource. It is not easy to work during the rainy season (December-March), but soon the company will bulldoze a track across the resource and drill it systematically.

The long-term aim is to put in a dedicated cobalt plant with a capacity of 2,000-3,000 tonnes per year. The proposed plant would produce a cobalt salt, cobalt hydroxide, or cobalt carbonate. Anvil hopes to enter the cobalt market in a couple of years.

The company may have up to 400 people working at the nearby riverbed rejects/tailings project. "All of the guys working at the cobalt project will eventually be hired to work on other projects," Turner stated.

When Anvil commenced production at Dikulushi in October 2002, it used an HMS plant it had built for US$6.2 million. Initially, the annual production rate was 13,000 tonnes copper and 900,000 oz. silver.

Staged development was always planned, and thanks to a high rate of return, the second development stage, which increased production by 50%, began last August.

The HMS plant was replaced by a grinding and flotation circuit, which cost US$7 million to build. Concentrate grade improved to 55-58% copper, from 38%, and 1,700 grams silver per tonne (up 89%). Recovery is about 92% (up 20%).

At the end of June 2003, Dikulushi had a measured resource of 573,000 tonnes grading 7.48% copper and 205 grams silver per tonne, and an indicated resource of 939,000 tonnes at 7.15% copper and 209 grams silver. These calculations are based on a 1.5% copper cutoff and contained resources to a depth of only 200 metres. The deposit is still open at depth.

The main copper orebody is in sandstone at a sandstone-carbonate contact. Major faults, which are visible in the pit, cut the rock, and formed a breccia that was the conduit for mineralizing fluids. Ore is primarily at the intersection of fold flexures with faults. The breccia is not mineralized.

Ore comprises chalcocite, malachite and bornite, with silver in solid solution.

The pit rim is at 1,000 metres; the bottom of the pit is at 925 metres. One hundred metres below the pit, drilling cut grades of up to 24% copper over a width of 30 metres.

Anvil has changed its fiscal reporting period to Jan. 1-Dec. 31 from July 1-June 30. For the six months ended Dec. 31, 2004, the company incurred a net profit of US$876,000 despite a setback in production at the Dikulushi copper-silver mine when the mining contractor fell into receivership.

The operating profit for the six months ended Dec. 31, 2004, was US$3.6 million, whereas for the fiscal year ended June 30, it was US$10.1 million.

For the six months ended Dec. 31, Dikilushi produced 5,520 tonnes (or 12.2 million lbs.) copper and 502,000 oz. silver at a cash cost of US74� per payable pound of copper (after silver credits).

Two factors helped offset the reduced access to ore: the flotation plant realized better metal recovery, and metal prices were higher.

Waste-rock removal was hampered by the loss of equipment. Anvil was not able to gain access to high-grade ore, so lower-grade ore, which averaged 4-5% copper, was processed. The company had previously stockpiled this material (following previous HMS processing).

By late October 2004, the company had bought two 60-tonne excavators and begun to make up for lost time.

In December, the company arranged to buy and lease additional haulage trucks. Anvil expects the high-grade parts of the deposit to be continuously accessible by the end of this quarter, and trucking capacity will be 65% greater than before.

The plan is to create a stockpile of ore. Over the next month, the processing-plant-capacity will be increased and fine-tuned (a second ball mill, which is already in place, is being brought on-stream), and the mining rate will be sped up by 50%.

A processing plant with a higher capacity was commissioned in September. Annual production is set to total 20,000 tonnes copper and 1.8 million oz. silver. Costs are up because of the increased consumption of fuel. A litre of diesel costs about US70� once it has reached the site.

Copper concentrate is trucked to Kilwa, where it is loaded on to a ferry and shipped 50 km to Nchelenge, Zambia. Roads are in better shape in Zambia, and the ore is trucked from there to smelters in various African countries.

Airborne magnetic and radiometric surveys have been flown over the property, and termite hill sampling has been done. As a result, new targets have been identified. Next, airborne magnetics will be flown over flexure areas, and 3,500 metres of reverse-circulation drilling will be performed.

Anvil Mining owns a 90% stake in the Dikulushi mine through its subsidiary, Anvil Mining Congo; the remaining 10% is held in trust by the Anvil Group for the social, economic and infrastructure development of the Dikulushi mine region.

Turner said Anvil has the support of government and the local community. "It's a matter of understanding the dynamics of the environment we're working in," he said. "We do a lot in terms of social programs, and this has a big impact." For example, the company built a school and contributed US$175,000 toward improvements to the Kilwa Hospital.

Anvil has 600 employees working at Dikulushi and the company practises multi-disciplinary training, which is necessary because malaria is endemic in the area and a major cause of chronic absenteeism.

The mine has enough reserves to sustain about three years of open-pit mining. In about the third quarter of 2007, the switch would be made to underground methods (though the company could begin developing a decline as early as late 2005).

Warfare between government troops and rebels near Kilwa forced Anvil to evacuate Dikulushi for a few days in October, though the company insists the move was preventive and that the mine was never a target.

"We may have to evacuate Dikulushi at times," Turner said. "But that's all in a day's work. We don't like it, we don't like seeing people at risk, but we take a conservative approach."

In late November 2004, Anvil entered into the Kinsevere-Nambulwa joint venture, a copper-cobalt prospect north of the provincial capital of Lubumbashi.

In the 1990s, G�camines estimated the Kinsevere resource at 1.4 million tonnes grading 5.4% copper and 0.18% cobalt, though this was based on wide-spaced drilling and does not conform to National Instrument 43-101 standards. Reverse-circulation drilling has just been completed and assays are pending.

On completion of a feasibility study, Anvil will own a 70% interest in the property, while the Mining Company of Katanga will own 30%.

The company holds other properties in the DRC, as well as in Zambia, the Philippines and Vietnam, and these are being explored at various stages.

At the end of January, the company had 29 million shares outstanding (33.4 million on a fully diluted basis). At presstime, shares were trading at $7. Recently First Quantum Minerals (FM-T) sold its 13.8% stake in the company.